Product and Process Innovations in a Horizontally Differentiated Product Market
AbstractFor a market of horizontal product differentiation, the paper examines the effects of the level of competition on the firm’s decision between a product and process innovation. When firms have to choose between the two types of innovation, it is demonstrated that both firms undertake the product innovation when the competi-tion is intense. For intermediate levels of competition, the firms choose different investment projects, and for less intense competition, the firms pursue cost–reducing innovations. When firms may undertake both innovations, they decide to undertake a mixture of the innovations depending on the innovation cost structure. Again, the firms are willing to incur higher costs into product innovations, when the competition is initially intense.
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Bibliographic InfoPaper provided by EconWPA in its series Industrial Organization with number 0201005.
Length: 16 pages
Date of creation: 08 Jan 2002
Date of revision:
Note: Type of Document - Tex; prepared on IBM PC; pages: 16
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product innovation; process innovation; horiyontal product differentiation;
Other versions of this item:
- Pia Weiß, 2001. "Product and Process Innovations in a Horizontally Differentiated Product Market," IWP Discussion Paper Series 07/2001, Institute for Economic Policy, Cologne, Germany.
- 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-2002-01-22 (All new papers)
- NEP-ENT-2002-01-05 (Entrepreneurship)
- NEP-MIC-2002-01-22 (Microeconomics)
- NEP-TID-2002-01-22 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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