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A framework for non-drastic innovation with product differentiation

Author

Listed:
  • Jeremy Jay Jackson

    (North Dakota State University)

  • Jason Smith

    (Utah State University)

Abstract

We model non-drastic technological innovation in a duopoly model with differentiated products. We derive profit functions for both firms which depend on only one variable, the technological gap. As our model derives product demands directly from agent utility we are able to fully describe the welfare effects of innovation. We show that the welfare improvements from innovation come not only as firms accrue higher profits, by charging consumers higher prices, but also as consumers enjoy higher quality products.

Suggested Citation

  • Jeremy Jay Jackson & Jason Smith, 2015. "A framework for non-drastic innovation with product differentiation," Economics Bulletin, AccessEcon, vol. 35(1), pages 259-269.
    • Handle: RePEc:ebl:ecbull:eb-15-00128
    as

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    References listed on IDEAS

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    Cited by:

    1. Ahmadiani, Mona & Hyde, Adam S. & Jackson, Jeremy, 2019. "Creative Destruction, Job Reallocation, and Subjective Well-Being," 2019 Annual Meeting, July 21-23, Atlanta, Georgia 290966, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    non-drastic innovation; product differentiation;

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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