Degree of Innovativeness and Market Structure: A Model
AbstractA stylized fact shows that firms rarely seek for radical breakthroughs and more frequently invest in small improvements of the existing technology. This paper proposes a model that compares firms’ value when firms can invest in strategies implying different degrees of innovativeness. The model shows that incremental strategies emerge as a dominant strategy for oligopolists when imitation of incremental innovation is sufficiently slow and firms are not too asymmetric in their access to knowledge. If these conditions are not respected, the model exhibits an additional symmetric Nash equilibrium where firms select radical innovations.
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Bibliographic InfoArticle provided by IUP Publications in its journal The IUP Journal of Managerial Economics.
Volume (Year): V (2007)
Issue (Month): 2 (May)
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Other versions of this item:
- Daniela Grieco, 2006. "Degree of innovativeness and market structure: A model," KITeS Working Papers 178, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised May 2006.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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