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Complementarity between product and process innovation in a monopoly setting

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  • Andrea Mantovani

Abstract

In this article we study complementarity between market-enhancing product innovation and cost-reducing process innovation in a monopoly setting. First, we consider the possibility for a firm to alternatively invest only along one of the two directions and compare the incentives of process vs. product innovation. Then, we allow the firm to invest simultaneously in both activities, showing that both investment levels and profit are higher than in the case of individual investment. Thus, product and process innovations are complementary, and the firm always prefers the simultaneous adoption of both activities.

Suggested Citation

  • Andrea Mantovani, 2006. "Complementarity between product and process innovation in a monopoly setting," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(3), pages 219-234.
  • Handle: RePEc:taf:ecinnt:v:15:y:2006:i:3:p:219-234 DOI: 10.1080/10438590500197315
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    Citations

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    Cited by:

    1. Alessandro Fedele & Andrea Mantovani, 2008. "Complementarity, Coordination, and Credit," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(2), pages 230-253, June.
    2. Pan, Xiaojun & Li, Shoude, 2016. "Dynamic optimal control of process–product innovation with learning by doing," European Journal of Operational Research, Elsevier, vol. 248(1), pages 136-145.
    3. Christian Le Bas & Nicolas Poussing, 2014. "Are Complex Innovators More Persistent Than Single Innovators? An Empirical Analysis Of Innovation Persistence Drivers," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 18(01), pages 1-21.
    4. Tatsuhiko Nariu & David Flath & Atsuo Utaka, 2012. "Returns System With Rebates," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(4), pages 1243-1256, November.
    5. repec:gam:jsusta:v:9:y:2017:i:10:p:1778-:d:113764 is not listed on IDEAS
    6. Levin, Mark & Matrosova, Kseniya, 2015. "Innovation management based concidering advertising and complementarity of public and private levels of technology," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 109-132.
    7. Ma, Xin & McSweeney, Peter, 2008. "Product and process innovation in the food processing industry: case study in Guangxi province," Australasian Agribusiness Review, University of Melbourne, Melbourne School of Land and Environment, vol. 16.
    8. Cahill, Sean & Rich, Tabitha & Cozzarin, Brian, 2015. "Innovation in the Canadian Food Processing Industry: Evidence from the Workplace and Employee Survey," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 18(2).
    9. Caroline Mothe & Thu Nguyen Nguyen Thi & Phu Nguyen-Van, 2015. "Complementarities in organizational innovation practices: evidence from French industrial firms Complementarities in organizational innovation practices: evidence from French industrial firms," Post-Print hal-01293802, HAL.
    10. Saha, Souresh, 2014. "Firm's objective function and product and process R&D," Economic Modelling, Elsevier, vol. 36(C), pages 484-494.
    11. Chenavaz, Régis, 2012. "Dynamic pricing, product and process innovation," European Journal of Operational Research, Elsevier, vol. 222(3), pages 553-557.
    12. Lambertini, Luca & Mantovani, Andrea, 2009. "Process and product innovation by a multiproduct monopolist: A dynamic approach," International Journal of Industrial Organization, Elsevier, vol. 27(4), pages 508-518, July.
    13. Régis Chenavaz, 2011. "Dynamic pricing rule and R&D," Economics Bulletin, AccessEcon, vol. 31(3), pages 2229-2236.
    14. Li, Shoude & Ni, Jian, 2016. "A dynamic analysis of investment in process and product innovation with learning-by-doing," Economics Letters, Elsevier, vol. 145(C), pages 104-108.

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