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Innovation, Imitation and Competition

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  • Zhou Wen

    (University of Hong Kong)

Abstract

In a general equilibrium framework, it is known that imitation may actually promote innovation (Aghion et al., 1997). The same effect is demonstrated with a standard oligopoly model in which one firm has the ability to develop technologies while all other firms imitate and obtain a fraction of it for free. Competition is shown to dampen innovation, while imitation may stimulate it if imitation is strong and competition moderate. The findings have implications for policy toward intellectual property rights protection, as weak protection may promote rather than impede technology innovation.

Suggested Citation

  • Zhou Wen, 2009. "Innovation, Imitation and Competition," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-16, July.
    • Handle: RePEc:bpj:bejeap:v:9:y:2009:i:1:n:27
    DOI: 10.2202/1935-1682.2256
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    References listed on IDEAS

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    1. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    2. Jiahua Che & Larry Qiu & Wen Zhou, 2009. "Intellectual Property Rights Enforcement in Imperfect Markets," Levine's Working Paper Archive 814577000000000242, David K. Levine.
    3. Philippe Aghion & Christopher Harris & Peter Howitt & John Vickers, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(3), pages 467-492.
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    Cited by:

    1. Junichiro Ishida & Toshihiro Matsumura & Noriaki Matsushima, 2011. "Market Competition, R&D And Firm Profits In Asymmetric Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 59(3), pages 484-505, September.
    2. Spyros Arvanitis & Florian Seliger, 2014. "Imitation versus innovation," KOF Working papers 14-367, KOF Swiss Economic Institute, ETH Zurich.
    3. Olga Slivko & Bernd Theilen, 2014. "Innovation or imitation? The effect of spillovers and competitive pressure on firms’ R&D strategy choice," Journal of Economics, Springer, vol. 112(3), pages 253-282, July.
    4. Ruble, Richard & Versaevel, Bruno, 2014. "Market shares, R&D agreements, and the EU block exemption," International Review of Law and Economics, Elsevier, vol. 37(C), pages 15-25.
    5. Marc Escrihuela-Villar & Jorge Guillén, 2014. "On the Relationship Between Innovation and Product Market Competition," The Japanese Economic Review, Japanese Economic Association, vol. 65(4), pages 543-557, December.
    6. Veronica Scuotto & Sunil Shukla, 2018. "Being Innovator or ‘Imovator’: Current Dilemma?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(1), pages 212-227, March.
    7. Dashu Wang & Veronica Scuotto, 2012. "Innovation, Second Mover and Network System," Symphonya. Emerging Issues in Management, University of Milano-Bicocca, issue 2 Innovat, pages 66-76.

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