Process and Product Innovation by a Multiproduct Monopolist: A Dynamic Approach

Luca Lambertini () and Andrea Mantovani

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We model the optimal behaviour of a multiproduct monopolist investing both in process and in product innovation in a dynamic setting. Product innovation reduces the degree of substitutability between any two varieties. First, we find that R&D efforts increase in both directions as the number of varieties grows. Second, we characterise the relative intensity of R&D activities according to the reservation price and the interaction between the number of varieties and the degree of product differentiation. Finally, we show the existence of complementarity within the R&D portfolio, i.e., decreasing marginal production cost prompts for an analogous reduction of product substitutability, and conversely

Date: 2005
New Economics Papers: this item is included in nep-ind, nep-ino and nep-mic
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Process and product innovation by a multiproduct monopolist: A dynamic approach (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:551

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