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Innovation and the persistence of monopoly under diseconomies of scope or scale

Author

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  • Flavio Delbono

    (University of Bologna)

  • Luca Lambertini

    (University of Bologna)

Abstract

We participate in the lasting debate about the persistence of monopolies under technological change, by examining two deterministic games modelling innovation auctions. We highlight some novel aspects within such debate. If product innovation is at stake, the joint effect of diseconomies of scope and product differentiation may allow the entrant to acquire the innovation and give rise to a duopoly. Process innovation is analysed in a model with increasing marginal production costs to show that the innovating monopolist always uses both technologies by virtue of Jensen’s inequality, and this is sufficient but not necessary to preserve its monopoly power.

Suggested Citation

  • 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.
  • Handle: RePEc:spr:epolin:v:49:y:2022:i:4:d:10.1007_s40812-022-00214-4
    DOI: 10.1007/s40812-022-00214-4
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    References listed on IDEAS

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    More about this item

    Keywords

    Process innovation; Product innovation; Auction; Sleeping patent;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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