On the Relationship between Competition and Innovation in a Duopoly with a Single Innovator
You-hua Chen (),
Pu-yan Nie and
X. Wang ()
Additional contact information
You-hua Chen: South China Agricultural University
Economics Bulletin, 2013, vol. 33, issue 4, 2648-2660
This paper studies the incentive by a single firm in a differentiated goods duopoly to engage in cost-reducing innovations and how this incentive is affected by the level of competition in the product market. It is found that a firm's innovation effort has a U-shaped relationship with the level of competition. This result generally holds true for both the initially more efficient firm and the initially less efficient firm and in both the open loop model and the closed loop model. Consumers always benefit from innovations and fare the best when the initially more efficient firm is the innovator.
Keywords: innovation; competition; asymmetric duopoly; differentiated goods (search for similar items in EconPapers)
JEL-codes: D4 L1 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-13-00366
Access Statistics for this article
More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().