Competitive pressure and innovation in vertically differentiated markets

Pedro Mendi

Economics Bulletin, 2015, vol. 35, issue 4, 2309-2316

Abstract: This paper analyzes the innovation incentives for a firm that produces a vertically differentiated product, in the presence of a competitive fringe that produces a lower-quality product. I find that the relationship between innovation incentives and competition, measured by the difference in quality levels may exhibit an inverted-U-shaped pattern.

Keywords: Vertical differentiation; innovation; competitive pressure (search for similar items in EconPapers)
JEL-codes: L1 O3 (search for similar items in EconPapers)
Date: 2015-11-20
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Competitive Pressure and Innovation in Vertically Differentiated Markets (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-14-00700

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