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The impact of competition on unilateral incentives to innovate

Author

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  • Nadja Trhal

Abstract

We investigate the impact of the degree of competition in a Cournot market on one firm's unilateral incentives to invest in R&D. Applying comparative static analyses we get different predictions depending on the magnitude of the innovation efficiency parameter alpha. Even inner solutions arose. For alpha->1 the comparative statics predicate that incentives to invest in R&D are strongest in a monopoly whereas for smaller alpha the optimal market structure for unilateral innovation varies depending on the cost level.

Suggested Citation

  • Nadja Trhal, 2005. "The impact of competition on unilateral incentives to innovate," Working Paper Series in Economics 20, University of Cologne, Department of Economics.
    • Handle: RePEc:kls:series:0020
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    More about this item

    Keywords

    innovation incentives; market structure; Cournot competition;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • 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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