Radical Innovation and R&D Competition
AbstractEmpirical evidence about innovation is doubtful in showing incumbent firms' and new entrants' attitude toward radical innovations. Moreover, theoretical works exhibit divergent conclusions when investigating the incentives to innovate. Our paper emphasizes the importance of distinguishing between degrees of innovativeness when comparing an incumbent's and an entrant's incentives to invest in innovation. The model captures the peculiarity of a radical innovation along three dimension: risk, impact on the existing market and capability of opening up a new market. The results emphasize the role of substitution and complementarity between markets in determining the incentives to innovative in the radical case. Implications on innovation policy are finally discussed.
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Bibliographic InfoArticle provided by SIE - Societa' Italiana degli Economisti (I) in its journal Rivista Italiana degli Economisti.
Volume (Year): 14 (2009)
Issue (Month): 2 (August)
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
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