Degree of innovativeness and market structure: A model
AbstractA limited number of business firms engage in disruptive innovative activity. When firms decide among alternative innovative patterns, inertial forces may bias their choices in favour of incremental innovations. 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 InfoPaper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 178.
Length: 28 pages
Date of creation: Apr 2006
Date of revision: May 2006
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Other versions of this item:
- Daniela Grieco, 2007. "Degree of Innovativeness and Market Structure: A Model," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(2), pages 7-27, May.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-05-27 (All new papers)
- NEP-COM-2006-05-27 (Industrial Competition)
- NEP-CSE-2006-05-27 (Economics of Strategic Management)
- NEP-ENT-2006-05-27 (Entrepreneurship)
- NEP-INO-2006-05-27 (Innovation)
- NEP-MIC-2006-05-27 (Microeconomics)
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