Imperfect competition, functional forms, and the size and distribution of research benefits
The effects of functional forms for supply and demand on the size and distribution of the returns to research are examined under a range of forms of competition. Under perfect competition, the choice of functional form is relatively unimportant for the estimation of research benefits. Under imperfect competition, the combination of the choice of functional forms for supply and demand and the nature of the research-induced supply shift can have profound implications for the results. Functional form plays a much more important role than in the competitive model. The most important contrast is between the constant elasticity model and the linear model (along with various cases of a generalized linear model). These findings are illustrated using a combination of analytical results and numerical simulations. © 1999 Elsevier Science B.V. All rights reserved.
Volume (Year): 21 (1999)
Issue (Month): 2 (October)
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- Pachico, Douglas & Lynam, John K. & Jones, Peter G., 1987. "The distribution of benefits from technical change among classes of consumers and producers: An ex anteanalysis of beans in Brazil," Research Policy, Elsevier, vol. 16(5), pages 279-285, October.
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- Shu-Yu Huang & Richard J. Sexton, 1996. "Measuring Returns to an Innovation in an Imperfectly Competitive Market: Application to Mechanical Harvesting of Processing Tomatoes in Taiwan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 558-571.
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