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Strategic R&D investment, competitive toughness and growth

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  • d’ASPREMONT, Claude
  • DOS SANTOS FERREIRA, Rodolphe
  • GERARD-VARET, Louis-André

Abstract

We show, within a single industry, the possibility that R&D‐investment is non‐monotonically related to competitive toughness: increasing when competition is soft and decreasing when competition is tough. This possibility results from the combination of a Schumpeterian markup squeezing effect discouraging innovation, and a concentration effect spurring innovators. It is obtained in a sectoral model where the number of innovators is random and where non‐successful investors may remain productive. The result is extended to a multisectoral stochastic endogenous growth model with overlapping generations of consumers and firms, the number of which is endogenously determined in the capital market.
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  • d’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe & GERARD-VARET, Louis-André, 2010. "Strategic R&D investment, competitive toughness and growth," LIDAM Reprints CORE 2240, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvrp:2240
    DOI: 10.1111/j.1742-7363.2010.00135.x
    Note: In : International Journal of Economic Theory, 6(3), 273-295, 2010
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    Cited by:

    1. Reis, Ana Balcão & Traca, Daniel A., 2008. "Spillovers and the competitive pressure for long-run innovation," European Economic Review, Elsevier, vol. 52(4), pages 589-610, May.
    2. Daria Onori, 2015. "Competition and Growth: Reinterpreting their Relationship," Manchester School, University of Manchester, vol. 83(4), pages 398-422, July.
    3. Yassine Lefouili, 2011. "Compte rendu d'ouvrage - Le low cost," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 92(3), pages 331-335.
    4. Lefouili, Yassine, 2011. "Compte rendu d'ouvrage - Le low cost," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 92(3).
    5. d'Aspremont, Claude & Dos Santos Ferreira, Rodolphe, 2009. "Price-quantity competition with varying toughness," Games and Economic Behavior, Elsevier, vol. 65(1), pages 62-82, January.
    6. Antonio Minniti, 2009. "Growth, Inter‐Industry And Intra‐Industry Competition And Welfare," The Japanese Economic Review, Japanese Economic Association, vol. 60(1), pages 110-132, March.

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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