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Innovation and product market concentration: Schumpeter, arrow, and the inverted U-shape curve
[Lessons from schumpeterian growth theory]

Author

Listed:
  • Flavio DelbonoBy
  • Luca Lambertini

Abstract

We investigate the relationship between market concentration and industry innovative effort within a familiar two-stage model of R&D race in which firms compete à la Cournot in the product market. With the help of numerical simulations, we show that such a setting is rich enough to generate Arrovian, Schumpeterian, and inverted U curves. We interpret these different patterns on the basis of the relative strength of the technological incentive and the strategic incentive. We then bridge our theoretical results and some recent empirical research.

Suggested Citation

  • Flavio DelbonoBy & Luca Lambertini, 2022. "Innovation and product market concentration: Schumpeter, arrow, and the inverted U-shape curve [Lessons from schumpeterian growth theory]," Oxford Economic Papers, Oxford University Press, vol. 74(1), pages 297-311.
    • Handle: RePEc:oup:oxecpp:v:74:y:2022:i:1:p:297-311.
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    File URL: http://hdl.handle.net/10.1093/oep/gpaa044
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    Cited by:

    1. Mauricio Canêdo Pinheiro & Filipe Lage Sousa, 2025. "Is there an inverted-U relationship between competition and innovation in Brazil?," Economics Bulletin, AccessEcon, vol. 45(3), pages 1406-1420.
    2. Sunday OTUYA, 2024. "Effect of Audit Market Concentration on Pricing and Audit Quality. Evidence from an Emerging Economy," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 5(5), pages 71-80, May.
    3. Flavio Delbono & Luca Lambertini, 2022. "Innovation and the persistence of monopoly under diseconomies of scope or scale," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(4), pages 747-757, December.
    4. Vincenzo Denicolò & Michele Polo, 2018. "The innovation theory of harm: an appraisal," IEFE Working Papers 103, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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