RESEARCH-AND-DEVELOPMENT, COMPETITION AND INNOVATION - PSEUDO-MAXIMUMLIKELIHOOD AND SIMULATED MAXIMUM-LIKELIHOOD METHODS APPLIED TO COUNT DATA MODELS WITH HETEROGENEITY

This paper focuses on the relationship between the research and develo pment (R&D) expenditures undertaken by firms and the number of patents claimed by them. The econometric methods we use incorporate two impor tant features of the data. First, we introduce a heterogeneity term ac counting for the unobservable factors affecting the production of inno vations. Second, we allow for a large proportion of the sample not to apply for a patent. Depending on the specification, estimation proceed s by maximum likelihood, pseudo-maximum likelihood or simulated maximu m likelihood methods, Our main findings are the following: (i) the ret urns to scale in the innovation technology may be constant on average and (ii) competitors' R&D may have a negative impact on own innovation , thus revealing a rivalry effect of intellectual property.