Adoption of Product and Process Innovations in Differentiated Markets: The Impact of Competition
The paper examines the effects of the degree of competition on firms'decisions to innovate in differentiated markets. Firms favor productinnovations if they produce close substitutes (so competition is severe) andfavor process innovations if products are differentiated (so competition isless severe). Assumptions on the strategic complementarity of product andprocess innovations and on the decreasing returns of a product innovationare found to be the critical assumptions in the sense of Milgrom and Roberts (1994). Copyright Kluwer Academic Publishers 2003
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Volume (Year): 23 (2003)
Issue (Month): 3 (December)
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References listed on IDEAS
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