Innovation and market concentration with asymmetric firms
This paper considers a theoretical model of n asymmetric firms that reduce their initial unit costs by spending on R&D activities. In accordance with Schumpeterian hypotheses we obtain that more efficient (bigger) firms spend more in R&D and this leads to a more concentrated market structure. We also find a positive relationship between innovation and market concentration. This calls for a corrective tax on R&D activities to curtail strategic incentives to over-invest in R&D trying to achieve a higher market share.
|Date of creation:||2004|
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- Poyago-Theotoky, Joanna, 1996.
"R&D Competition with Asymmetric Firms,"
Scottish Journal of Political Economy,
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- Barros,P.P. & Nilssen,T., 1999.
"Industrial policy and firm heterogeneity,"
02/1999, Oslo University, Department of Economics.
- Ana I. Saracho, 2002. "Patent Licensing Under Strategic Delegation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(2), pages 225-251, 06.
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