Degree of innovativeness and market structure: A model

Daniela Grieco
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Daniela Grieco: CESPRI, Bocconi University, Milano,Italy.

No 178, KITeS Working Papers from KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy

Abstract: A limited number of business firms engage in disruptive innovative activity. When firms decide among alternative innovative patterns, inertial forces may bias their choices in favour of incremental innovations. This paper proposes a model that compares firms’ value when firms can invest in strategies implying different degrees of innovativeness. The model shows that incremental strategies emerge as a dominant strategy for oligopolists when imitation of incremental innovation is sufficiently slow and firms are not too asymmetric in their access to knowledge. If these conditions are not respected, the model exhibits an additional symmetric Nash equilibrium where firms select radical innovations.

Keywords: Radical innovation; Incremental Innovation; Imperfect competition; Patent race. (search for similar items in EconPapers)
JEL-codes: D21 D81 L20 O33 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2006-04, Revised 2006-05
New Economics Papers: this item is included in nep-com, nep-cse, nep-ent, nep-ino and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Degree of Innovativeness and Market Structure: A Model (2007)
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