Competition, market concentration and innovation in Ecuador

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Hector Alberto Botello
Isaac Guerrero Rincón


Business growth, Highgrowth companies, Job creation, Entrepeneurship, Innovation


The objective is to determine how market concentration affects firms’ decisions
to innovate. With company-level data l from the 2010 Ecuadorian economic
census , a probabilistic/linear model was calculated with correction for selection
bias. Ecuadorian companies have a limited innovation capability and there is a
persistence in market concentration. The estimates confirm the theory of market
power in the propensity to innovate for both models. Consequently, increased
market share leads to an increase in the likelihood of innovation, thanks to the
ability to exploit the gains from these processes.


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