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Degree of Innovativeness and Market Structure: A Model

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  • Daniela Grieco

Abstract

A stylized fact shows that firms rarely seek for radical breakthroughs and more frequently invest in small improvements of the existing technology. This paper proposes a model that compares firms’ value when firms can invest in strategies implying different degrees of innovativeness. The model shows that incremental strategies emerge as a dominant strategy for oligopolists when imitation of incremental innovation is sufficiently slow and firms are not too asymmetric in their access to knowledge. If these conditions are not respected, the model exhibits an additional symmetric Nash equilibrium where firms select radical innovations.

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  • Daniela Grieco, 2007. "Degree of Innovativeness and Market Structure: A Model," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(2), pages 7-27, May.
    • Handle: RePEc:icf:icfjme:v:05:y:2007:i:2:p:7-27
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    Cited by:

    1. Unay Gailhard, ilkay & Bavorova, Miroslava, 2014. "Innovation at Rural Enterprises: Results from a Survey of German Organic and Conventional Farmers," MPRA Paper 58331, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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