Competition and firms’ innovation outcomes
July 30
12:20
2026
2026-07-30
Date
21 July 2026
Australian Government
2026
Competition and firms’ innovation outcomes 1.06 MB
Innovation is important because it helps businesses become more productive. But businesses need the right amount of competition to encourage new ideas.
This note shows that Australian businesses with more competitors are more likely to:
Using survey data and a new measure of local competition, we find that innovation increases as businesses move from having no competitors to having more competition.
The largest increase occurs when competition rises from low to moderate levels. Businesses with 5 or more competitors are around 10 to 15 per cent more likely to innovate than businesses with no competitors.