The Role of an Imitating Firm in a Dynamic Context
We analyze the effects of an imitating firm on the behavior of the innovating firm. The framework of analysis used is a dynamic duopoly model of vertical product differentiation, where both the innovator and the imitator compete simultaneously in price and quality. We obtain that when the market is small, the presence of an imitator encourages the innovator to increase its innovating process, so the entry of the imitator should not be obstructed; and, when the market is large, the imitator reduces the innovator’s incentives to invest its economic resources in R&D and to provide a higher quality, so the entry of the imitator should not be encouraged.
Volume (Year): (2007)
Issue (Month): 67 (Julio-Diciembre)
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- BELLEFLAMME, Paul & VERGARI, Cecilia, 2006.
"Incentives to innovate in oligopolies,"
CORE Discussion Papers
2006014, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Paul, BELLEFLAMME & Cecilia, VERGARI, 2006. "Incentives to innovate in oligopolies," Discussion Papers (ECON - Département des Sciences Economiques) 2006008, Université catholique de Louvain, Département des Sciences Economiques.
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- Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
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