We investigate dynamic R&D for process innovation in an oligopoly where firms invest in cost-reducing activities. We focus on the correlation between R&D intensity and market structure, proving that the industry R&D investment at equilibrium monotonically increases in the number of firms. This result contradicts the established wisdom acquired from static games on the same topic. We also prove that, if competition is sufficiently tough, any increase in product substitutability reduces R&D efforts.
R. Cellini, L. Lambertini (2011). R&D Incentives under Bertrand Competition: A Differential Game. JAPANESE ECONOMIC REVIEW, 62, 387-400 [10.1111/j.1468-5876.2011.00541.x].
R&D Incentives under Bertrand Competition: A Differential Game
LAMBERTINI, LUCA
2011
Abstract
We investigate dynamic R&D for process innovation in an oligopoly where firms invest in cost-reducing activities. We focus on the correlation between R&D intensity and market structure, proving that the industry R&D investment at equilibrium monotonically increases in the number of firms. This result contradicts the established wisdom acquired from static games on the same topic. We also prove that, if competition is sufficiently tough, any increase in product substitutability reduces R&D efforts.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
