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Impact of Technical Progress on the relationship between Competition and Investment

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  • Jeanjean, François

Abstract

This paper investigates the impact of technical progress on the relationship between competition an investment. Using a model of oligopoly competition with di¤erentiated products where firms invest to reduce their marginal cost of production, I find that technical progress, which increases the impact of investment on cost reduction, decreases the level of competition that maximizes investment of the industry. This feature holds also for consumer surplus and Welfare. In the model, competition is measured either by the number of competitors or by the degree of substitutability between o¤ers. Result holds for both measures.Two parametric examples illustrate these features.

Suggested Citation

  • Jeanjean, François, 2018. "Impact of Technical Progress on the relationship between Competition and Investment," 29th European Regional ITS Conference, Trento 2018 184948, International Telecommunications Society (ITS).
    • Handle: RePEc:zbw:itse18:184948
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    References listed on IDEAS

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    2. Georges Vivien Houngbonon & François Jeanjean, 2016. "What level of competition intensity maximises investment in the wireless industry?," PSE-Ecole d'économie de Paris (Postprint) halshs-01510421, HAL.
    3. Haucap, Justus & Rasch, Alexander & Stiebale, Joel, 2019. "How mergers affect innovation: Theory and evidence," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 283-325.
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    23. Ciriani, Stephane & Jeanjean, Francois, 2019. "Competition, technological change and productivity gains: the contribution of information technologies," 30th European Regional ITS Conference, Helsinki 2019 205175, International Telecommunications Society (ITS).
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    Cited by:

    1. Lefouili, Yassine & Madio, Leonardo, 2023. "Market Structure and Investments : A Progress Report," TSE Working Papers 23-1491, Toulouse School of Economics (TSE), revised Mar 2024.
    2. Aimene, Louise & Jeanjean, François & Liang, Julienne, 2021. "Impact of mobile operator consolidation on unit prices," Telecommunications Policy, Elsevier, vol. 45(4).
    3. Stéphane Ciriani & François Jeanjean, 2020. "Competition, Technological Change and Productivity Gains: A Sectoral Analysis," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(3), pages 192-198, May.
    4. Jeanjean, François & Liang, Julienne, 2023. "Market structure and performance in mobile markets. The example of Europe," 32nd European Regional ITS Conference, Madrid 2023: Realising the digital decade in the European Union – Easier said than done? 277979, International Telecommunications Society (ITS).

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    More about this item

    Keywords

    Market structure; Investment; technical progress; competition;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • 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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