Network compatibility, intensity of competition and process R&D: A Generalization

Sumit Shrivastav ()

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: This paper analyses 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 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 dont always undertake process innovation; but, when Bertrand firms also undertake process innovation, Cournot-Bertrand R&D ranking depends on the strength of network externalities.

Keywords: Network compatibility; Network Externalities; Process R&D; Bertrand-Cournot Compari- son; Product Differentiation (search for similar items in EconPapers)
JEL-codes: D43 L13 O31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2020-02
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-ind, nep-knm, nep-mic, nep-net, nep-ore, nep-sbm and nep-tid
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Journal Article: Network compatibility, intensity of competition and process R&D: A generalization (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2020-007

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