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Innovation, R&D Spillovers, and the Variety and Concentration of the Local Industry Structure

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  • Samuli Leppälä

Abstract

This paper presents a Cournot oligopoly model with R&D spillovers both within and across industries. The aim is to provide a theoretical foundation for the main hypotheses regarding the effect of the local industry structure on innovation and output. Depending on the spillover rates and the degree of product differentiation between the industries, the firms respond differently to changes in variety and concentration, which can explain the mixed empirical results. Furthermore, innovation and output can react in opposite ways, which makes the choice of the performance measure critical.

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  • Samuli Leppälä, 2020. "Innovation, R&D Spillovers, and the Variety and Concentration of the Local Industry Structure," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(3), pages 1231-1255, July.
    • Handle: RePEc:bla:scandj:v:122:y:2020:i:3:p:1231-1255
    DOI: 10.1111/sjoe.12368
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