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Technology Strategy And Product Diversity


  • Xiangkang Yin


This paper considers a three-stage game of a differentiated oligopoly: firms first make their entry decisions, then they choose production technologies and in the third stage of the game they decide product prices. The technology choice can be understood as selecting one from a pool of those recently available as well as developing a new technology through innovative activities. The resulting market equilibrium is then compared with the social optimum. The main conclusions are that a monopolistically competitive market will typically undersupply both product variety and production scale. R&D competition in a free entry differentiated oligopoly will lead to insufficient R&D investment at firm and industry levels.

Suggested Citation

  • Xiangkang Yin, 1998. "Technology Strategy And Product Diversity," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(2), pages 159-175.
  • Handle: RePEc:taf:ecinnt:v:7:y:1998:i:2:p:159-175
    DOI: 10.1080/10438599800000032

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    Monopolistic competition; Technology choice; R&D competition; Differentiated goods JEL Classification: D43; L13; O31;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • 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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