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Defensive strategies in quality ladders

  • Ledezma, Ivan

This paper analyses the potentially defensive behaviour of patent-race winners and the ensuing effect on aggregate R&D effort. We propose a quality-ladder model where leaders strategically acquire a technology advantage and are able to innovate. In this context, product-market regulation, by affecting this strategic behaviour, may have either a positive or negative effect on aggregate R&D intensity. The negative effect is likely to pertain in liberal markets, whereas the positive influence arises in more regulated environments, and can be stronger for larger jumps in innovation. These steady-state equilibrium outcomes are consistent with the puzzling patterns in data from manufacturing industries in 14 OECD countries over the 1987–2003 period.

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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 37 (2013)
Issue (Month): 1 ()
Pages: 176-194

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Handle: RePEc:eee:dyncon:v:37:y:2013:i:1:p:176-194
DOI: 10.1016/j.jedc.2012.07.006
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