Monopolistic competition for the market with heterogeneous firms

Federico Etro ()

Economics Letters, 2019, vol. 179, issue C, 9-12

Abstract: I study monopolistic competition in patent races where firms are heterogeneous in R&D costs. Only the most efficient firms invest, and they invest more when the value of innovation is higher, while the endogenous set of active firms depends on the profitability of innovation. In particular, selection effects (increasing R&D productivity) emerge after a reduction of the entry cost or after an increase (a reduction) of the value of innovation if the elasticity of the probability of innovation is increasing (decreasing) in investment.

Keywords: Patent races; Heterogeneous firms; Monopolistic competition (search for similar items in EconPapers)
JEL-codes: L1 O3 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:179:y:2019:i:c:p:9-12

DOI: 10.1016/j.econlet.2019.03.003

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