Technological Progress in Races for Product Supremacy

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Technological Progress in Races for Product Supremacy

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Nguyen, Thang

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Thang Quang Nguyen

Abstract

How does market structure affect quality innovation efforts and social welfare? This study considers three allocation mechanisms in a model of dynamic quality innovation: monopoly, duopoly, and the social planner. In this model, quality advances depend upon a stock of accumulated know-how, allowing for more flexible innovation strategies and direct comparisons of technology frontiers which show the largest reachable know-how stocks. When products are perfectly substitutable, the technology frontier is highest under the social planner, lower under duopoly, and lowest under monopoly. However, when products are less substitutable, a duopoly may surpass the technology frontier under the social planner along an unbalanced innovation path. Ex-ante and long-run social welfare are always highest under the social planner and lowest under monopoly.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 235.

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Date of creation: 01 May 2004
Date of revision: 01 Nov 2006
Handle: RePEc:pra:mprapa:235

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Find related papers by JEL classification:
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Investment, or Financing
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-10-21 (All new papers)
NEP-BEC-2006-10-21 (Business Economics)
NEP-COM-2006-10-21 (Industrial Competition)
NEP-INO-2006-10-21 (Innovation)
NEP-MIC-2006-10-21 (Microeconomics)

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