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Innovation and cooperation with horizontal spillovers

Author

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  • Khazabi, Massoud

Abstract

The paper proposes a theory of innovation and market structure. The model incorporates n firms with horizontal spillovers all interacting within a hypothetical industry. In a two-stage sequential game framework, four types of cooperation are studied: full non-cooperation; cooperation in both stages; cooperation only in the R&D stage; and simultaneous cooperation and non-cooperation in the R&D stage. It is shown that the effect of competition on total innovation investment varies among all four cases and mostly depends on the level of spillover effects as well as the level of coordination among competing firms.

Suggested Citation

  • Khazabi, Massoud, 2004. "Innovation and cooperation with horizontal spillovers," MPRA Paper 39497, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:39497
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    File URL: https://mpra.ub.uni-muenchen.de/39497/1/MPRA_paper_39497.pdf
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    References listed on IDEAS

    as
    1. David Encaoua & Abraham Hollander, 2002. "Competition Policy and Innovation," Oxford Review of Economic Policy, Oxford University Press, vol. 18(1), pages 63-79, Spring.
    2. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, pages 701-728.
    3. Dubey, Pradeep & Wu, Chien-wei, 2002. "When less competition induces more product innovation," Economics Letters, Elsevier, vol. 74(3), pages 309-312, February.
    4. Jan Boone, 2000. "Competitive Pressure: The Effects on Investments in Product and Process Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 549-569, Autumn.
    5. Scott,John T., 2005. "Purposive Diversification and Economic Performance," Cambridge Books, Cambridge University Press, number 9780521022583, March.
    6. Kamien,Morton I. & Schwartz,Nancy L., 1982. "Market Structure and Innovation," Cambridge Books, Cambridge University Press, number 9780521293853, March.
    7. MacDonald, James M, 1994. "Does Import Competition Force Efficient Production?," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 721-727, November.
    8. Suetens, Sigrid, 2005. "Cooperative and noncooperative R&D in experimental duopoly markets," International Journal of Industrial Organization, Elsevier, vol. 23(1-2), pages 63-82, February.
    9. Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, vol. 106(437), pages 925-951, July.
    10. Weinberg, John A, 1992. "Exclusionary Practices and Technological Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 135-146, June.
    11. Richard Blundell & Rachel Griffith & John van Reenen, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 529-554.
    12. Boone, Jan, 2001. "Intensity of competition and the incentive to innovate," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 705-726, April.
    13. Aoki, Reiko, 1991. "R&D Competition for Product Innovation: An Endless Race," American Economic Review, American Economic Association, vol. 81(2), pages 252-256, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    R&D; Spillovers; Cooperation;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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