Competition and Innovation: An Experimental Investigation

Dario Sacco () and Armin Schmutzler
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Dario Sacco: Socioeconomic Institute, University of Zurich

No 807, SOI - Working Papers from Socioeconomic Institute - University of Zurich

Abstract: The paper analyzes the effects of more intense competition on firms’ incentives to invest in process innovations. We carry out experiments based on two-stage games, where R&D investment choices are followed by product market competition. As predicted by theory, an increase in the number of firms from two to four reduces investments. However, a positive effect is observed for a switch from Cournot to Bertrand, even though theory predicts a negative effect in the four-player case.

Keywords: R&D investment; intensity of competition; experiment (search for similar items in EconPapers)
JEL-codes: C92 L13 O31 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2008-05
New Economics Papers: this item is included in nep-com, nep-exp, nep-ino, nep-ipr, nep-pr~, nep-knm, nep-mic and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.zora.uzh.ch/id/eprint/52394/1/wp0807.pdf first version, 2008 (application/pdf)

Related works:
Journal Article: Competition and innovation: an experimental investigation (2010)
Working Paper: Competition and Innovation: An Experimental Investigation (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:soz:wpaper:0807

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