Innovation and competition: The role of the product market

Guillermo Marshall and Alvaro Parra

International Journal of Industrial Organization, 2019, vol. 65, issue C, 221-247

Abstract: We study how competition impacts innovation (and welfare) when firms compete both in the product market and in innovation development. This relationship is complex and may lead to scenarios in which a lessening of competition increases R&D and consumer welfare in the long run. We provide conditions for when competition increases or decreases industry innovation and welfare. These conditions are based on properties of the product market payoffs. Implications for applied work and policy are discussed.

Keywords: Sequential innovation; Product market competition; Dynamic oligopoly; Competition policy; Merger review (search for similar items in EconPapers)
JEL-codes: D43 L40 L51 O31 O34 O38 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:65:y:2019:i:c:p:221-247

DOI: 10.1016/j.ijindorg.2019.04.001

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