We study complementarity between product and process innovation in a monopoly setting. First we consider the possibility for the firm to alternatively invest only along one of the two directions and compare the incentives of process vs product innovation. Then we allow the firm to invest simultaneously in both activities, showing that both investment levels as well as the profit are higher than in case of individual investment. Product and process innovations are then complementary and the firm always prefers a simultaneous adoption.
Complementarity between product and process innovation in a monopoly setting / A. Mantovani. - In: ECONOMICS OF INNOVATION AND NEW TECHNOLOGY. - ISSN 1043-8599. - STAMPA. - 15:3(2006), pp. 219-234. [10.1080/10438590500197315]
Complementarity between product and process innovation in a monopoly setting
MANTOVANI, ANDREA
2006
Abstract
We study complementarity between product and process innovation in a monopoly setting. First we consider the possibility for the firm to alternatively invest only along one of the two directions and compare the incentives of process vs product innovation. Then we allow the firm to invest simultaneously in both activities, showing that both investment levels as well as the profit are higher than in case of individual investment. Product and process innovations are then complementary and the firm always prefers a simultaneous adoption.| File | Dimensione | Formato | |
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