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Innovation by leaders Author info | Abstract | Publisher info | Download info | Related research | Statistics Federico Etro
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A new rationale for the persistence of monopolies is based on a precommitment of the incumbent monopolist to invest in R&D. In a patent race, as long as entry is free, the Arrow effect disappears: the incumbent has more incentives to invest than any outsider. Paradoxically, a market with some persistence of monopoly is competitive, while one with continuous leapfrogging must hide some barriers to entry. When the size of innovations is endogenous, leaders invest in more radical innovations. If there is a sequence of innovations, cycling investment emerges. Finally, I apply the idea to a general equilibrium model of Schumpeterian growth with persistence of monopoly. Copyright 2004 Royal Economic Society.
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Article provided by Royal Economic Society in its journal The Economic Journal .
Volume (Year): 114 (2004)
Issue (Month): 495 (04)
Pages: 281-303
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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Czarnitzki, Dirk & Kraft, Kornelius, 2007.
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Pietro Peretto & Michelle Connolly, 2007.
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