 Network compatibility, intensity of competition and process R&D: A generalizationMathematical Social Sciences, 2021, vol. 109, issue C, 152-163 Abstract: This paper analyzes implications of network compatibility and competition on process innovation in differentiated network goods duopoly. It shows that firms’ R&D investments are strategic substitutes (complements) if effective network compatibility is less (more) than product substitutability, regardless of the nature of product market competition. If R&D investments are strategic complements, firms always invest in process innovation and they invest more under Bertrand competition than under Cournot competition. If R&D investments are strategic substitutes, unlike Cournot firms, Bertrand firms do not always undertake process innovation; but when Bertrand firms also undertake process innovation, Cournot–Bertrand R&D ranking depends on the strength of network externalities. Presence of R&D spillover improves the case of strategic complementarity of R&D levels under both Bertrand and Cournot competition. Keywords: Network compatibility; Network externalities; Process R&D; Bertrand–Cournot comparison; Product differentiation; R&D spillover (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:109:y:2021:i:c:p:152-163 DOI: 10.1016/j.mathsocsci.2020.12.003 Access Statistics for this article Mathematical Social Sciences is currently edited by J.-F. Laslier More articles in Mathematical Social Sciences from Elsevier |
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