The aim of this paper is to analyse the impact of market size on innovation in the seed industry. The analysis is based on a panel dataset that covers 19 large crops in France during the period 1989-2012. Our econometric analysis is based on a negative binomial specification and we conduct both cross section as well as panel data analysis. We show that the French crop area always has a positive and significant effect on the number of innovations introduced each year. Market size of foreign countries may be either positive or negative revealing synergy or substitution effects. When hybrid crops are considered, the innovation is mainly determined by a positive and very significant fixed effect, crop area having no more influence. This last result can be interpreted as market size being mainly dependent on crop area for non-hybrid crop and dependent of price mark-up for hybrid crops.
