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Incentives to innovate in oligopolies

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  • BELLEFLAMME, Paul
  • VERGARI, Cecilia

Abstract

In the spirit of Arrow (1962), we examine, in an oligopoly model with horizontally differentiated products, how much a firm is willing to pay for a process innovation that it would be the only one to use. We show that different measures of competition (number of firms, degree of product differentiation, Cournot vs Bertrand) affect incentives to innovate in non-monotonic, different, and potentially opposite ways.

Suggested Citation

  • BELLEFLAMME, Paul & VERGARI, Cecilia, 2006. "Incentives to innovate in oligopolies," LIDAM Discussion Papers CORE 2006014, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2006014
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    References listed on IDEAS

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    More about this item

    Keywords

    innovation; profit incentive; oligopoly; product dierentiation.;
    All these keywords.

    JEL classification:

    • 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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