Competition in product design: An experiment exploring innovation behavior
AbstractWe experimentally investigate competition in innovation in a patent race scenario. Pairs of subjects compete as seller firms on a duopoly market, engaging in risky search investments. Successful innovation is rewarded through temporary monopoly rents. Throughout the interaction, subjects receive feedback on own and other's search success and profit margin. Partitioning subjects into subgroups of investor types reveals that the majority of subjects condition investments on the degree of competition as measured by sales shares, while for others no correlation is ascertained. Heterogeneity in individual risk attitudes and differing experiences with related search tasks may explain this finding.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-014.
Date of creation: 07 May 2007
Date of revision:
innovation; competition; imitation; patent race;
Other versions of this item:
- Uwe Cantner & Werner Güth & Andreas Nicklisch & Torsten Weiland, 2009. "Competition In Product Design: An Experiment Exploring Innovation Behavior," Metroeconomica, Wiley Blackwell, vol. 60(4), pages 724-752, November.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-05-12 (All new papers)
- NEP-CBE-2007-05-12 (Cognitive & Behavioural Economics)
- NEP-COM-2007-05-12 (Industrial Competition)
- NEP-EXP-2007-05-12 (Experimental Economics)
- NEP-INO-2007-05-12 (Innovation)
- NEP-IPR-2007-05-12 (Intellectual Property Rights)
- NEP-MIC-2007-05-12 (Microeconomics)
- NEP-MKT-2007-05-12 (Marketing)
- NEP-TID-2007-05-12 (Technology & Industrial Dynamics)
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