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INCENTIVES TO INNOVATE IN OLIGOPOLIES
Author(s) -
BELLEFLAMME PAUL,
VERGARI CECILIA
Publication year - 2011
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2009.02131.x
Subject(s) - oligopoly , cournot competition , incentive , economics , product differentiation , arrow , microeconomics , competition (biology) , bertrand competition , product (mathematics) , product innovation , industrial organization , mathematics , computer science , ecology , geometry , biology , programming language
In the spirit of Arrow ( The Rate and Direction of Inventive Activity , Princeton, NJ, Princeton University Press, 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.