Competition, Innovation and Increasing Returns

George B. Richardson

No 96-10, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: This paper concerns the operation of competition in the presence of a high rate of innovation and increasing returns. Given free competition there is likely to exist, in this case, a tendency towards what may be called ‘dynamic equilibrium’, a tendency, that is to say, for the rate of investment in product development to rise or fall towards the level at which this investment yields only a normal return. Thus, competition, increasing returns and innovation may co-exist.

Keywords: Innovation; increasing returns; competition (search for similar items in EconPapers)
JEL-codes: B1 D20 D40 D5 (search for similar items in EconPapers)
Date: 1996
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Citations: View citations in EconPapers (6)

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