Product market competition policy and technological performance
Stricter competition policy reduces expected payoffs before and after innovation, but reduces pre-innovation payoffs relatively more than post-innovation payoffs, and therefore increases the equilibrium level of R&D activity: tough product-market competition policy stimulates innovation. There is an inverted-U relationship between competition policy and expected welfare. The model also permits analysis of the effect of R&D spillovers and of alternative R&D cooperation regimes on expected welfare, on R&D efforts, and on the expected time to discovery of a cost-saving innovation.
|Date of creation:||Feb 1998|
|Publication status:||Published in: George Norman, Jacques-François Thisse (eds.). Market Structure and Competition Policy: Game-Theoretic Approaches. Cambridge University Press, 2000, pp 161-190|
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- Martin, Stephen, 1996. "R & D joint ventures and tacit product market collusion," European Journal of Political Economy, Elsevier, vol. 11(4), pages 733-741, April.