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Competition In Product Design: An Experiment Exploring Innovation Behavior

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  • Uwe Cantner
  • Werner Güth
  • Andreas Nicklisch
  • Torsten Weiland

Abstract

We experimentally investigate competition for innovations in a patent race scenario. Pairs of subjects compete as seller firms on a duopoly market, investing in risky search. Successful innovations resulting thereof are rewarded via temporary monopoly rents. Classifying investor types reveals that most of them invest according to objective investment criteria, such as probability of search success and cash flow, as well as to non‐pecuniary criteria, such as intensity of competition and relative performance. For a minority, however, no such correlation is ascertained.

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  • Uwe Cantner & Werner Güth & Andreas Nicklisch & Torsten Weiland, 2009. "Competition In Product Design: An Experiment Exploring Innovation Behavior," Metroeconomica, Wiley Blackwell, vol. 60(4), pages 724-752, November.
    • Handle: RePEc:bla:metroe:v:60:y:2009:i:4:p:724-752
    DOI: 10.1111/j.1467-999X.2009.04057.x
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    2. Werner Güth & Kirsten Häger & Oliver Kirchkamp & Joachim Schwalbach, 2016. "Testing Forbearance Experimentally: Duopolistic Competition of Conglomerate Firms," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 23(1), pages 63-86, February.
    3. Brüggemann Julia & Proeger Till, 2017. "The Effectiveness of Public Subsidies for Private Innovations. An Experimental Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(4), pages 1-21, October.
    4. Julia Brüggemann & Kilian Bizer, 2016. "Laboratory experiments in innovation research: a methodological overview and a review of the current literature," Journal of Innovation and Entrepreneurship, Springer, vol. 5(1), pages 1-13, December.
    5. Mathias Erlei & Anne-Kathrin Dimmig, 2012. "Quasi-Rational R&D Behavior in an Environment with Fundamental Uncertainty," TUC Working Papers in Economics 0008, Abteilung für Volkswirtschaftslehre, Technische Universität Clausthal (Department of Economics, Technical University Clausthal).
    6. Brüggemann, Julia & Crosetto, Paolo & Meub, Lukas & Bizer, Kilian, 2016. "Intellectual property rights hinder sequential innovation. Experimental evidence," Research Policy, Elsevier, vol. 45(10), pages 2054-2068.
    7. Brüggemann, Julia & Proeger, Till, 2017. "The effectiveness of public subsidies for private innovations: An experimental approach," University of Göttingen Working Papers in Economics 266, University of Goettingen, Department of Economics, revised 2017.
    8. Henrekson, Magnus & Johansson, Dan & Karlsson, Johan, 2021. "To Be or Not to Be: The Entrepreneur in Endogenous Growth Theory," Working Papers 2021:3, Örebro University, School of Business.
    9. Alexander Cuntz (a) And Yi Qian (b), 2021. "The Impacts of Counterfeiting on Corporate Investment," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 46(2), pages 1-40, June.
    10. Engel, Christoph & Kleine, Marco, 2015. "Who is afraid of pirates? An experiment on the deterrence of innovation by imitation," Research Policy, Elsevier, vol. 44(1), pages 20-33.
    11. Brüggemann, Julia & Meub, Lukas, 2017. "Experimental evidence on the effects of innovation contests," Information Economics and Policy, Elsevier, vol. 39(C), pages 72-83.
    12. Anna Gardocka-Jałowiec, 2011. "Neuroeconomic Conditioning of the Influence of a Market Demand of Consumers on an Innovative Character of Polish Companies," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 5(1), March.
    13. Brueggemann, Julia & Meub, Lukas, 2015. "Experimental evidence on the effects of innovation contests," University of Göttingen Working Papers in Economics 251, University of Goettingen, Department of Economics.

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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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