The impact of competition on unilateral incentives to innovate

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The impact of competition on unilateral incentives to innovate

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Nadja Trhal

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Nadja Trhal

Abstract

We investigate the impact of the degree of competition in a Cournot market on one firm's unilateral incentives to invest in R&D. Applying comparative static analyses we get different predictions depending on the magnitude of the innovation efficiency parameter alpha. Even inner solutions arose. For alpha->1 the comparative statics predicate that incentives to invest in R&D are strongest in a monopoly whereas for smaller alpha the optimal market structure for unilateral innovation varies depending on the cost level.

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Paper provided by University of Cologne, Department of Economics in its series Working Paper Series in Economics with number 20.

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Date of creation: 29 Aug 2005
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Handle: RePEc:kls:series:0020

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Find related papers by JEL classification:
D4 - Microeconomics - - Market Structure and Pricing
L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives

This paper has been announced in the following NEP Reports:

NEP-ALL-2005-09-11 (All new papers)
NEP-COM-2005-09-11 (Industrial Competition)
NEP-INO-2005-09-11 (Innovation)
NEP-MIC-2005-09-11 (Microeconomics)

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