Template-type: ReDif-Paper 1.0 
Author-Name: Dawid, Herbert
Author-Email: hdawid@wiwi.uni-bielefeld
Author-workplace-name: Bielefeld University
Author-Name: Pellegrino, Gabriele
Author-Email: gabriele.pellegrino@epfl.ch
Author-workplace-name: Ecole polytechnique federale de Lausanne
Author-Name: Vivarelli, Marco 
Author-Email: vivarelli@merit.unu.edu
Author-workplace-name: UNU-MERIT, Maastricht University, IZA, Bonn, and
	 Universita Cattolica del Sacro Cuore, Institute of Economic Policy, Milano
Title: Is the demand-pull driver equally crucial for product vs process innovation? 
Abstract: While the extant innovation literature has provided extensive evidence 
	 of the so-called "demand-pull" effect, the possible diverse impact of 
	 demand evolution on product vs process innovation activities has not 
	 been yet investigated. This paper develops a formal model predicting a 
	 larger inducing impact of past sales in fostering product rather than 
	 process innovation. This prediction is then tested through a dynamic 
	 microeconometric model, controlling for R&D persistence, sample 
	 selection, observed and unobservable individual firm effects and time 
	 and sectoral peculiarities. Results are consistent with the model and 
	 suggest that an expansionary economic policy may benefit the diffusion 
	 of new products or even the emergence of entire new sectors.
Keywords: technological change, R&D, demand-pull innovation, dynamic two tobit 
Classification-JEL: O31, O32
Series: UNU-MERIT Working Papers
Creation-Date: 20170904
Number: 2017-035
File-URL: https://unu-merit.nl/publications/wppdf/2017/wp2017-035.pdf
File-Format: application/pdf
File-Size: 275 kb
Handle: RePEc:unm:unumer:2017035