R&D Investments in Markets with Network Effects

Malgorzata Knauff and Adam Karbowski ()
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Adam Karbowski: SGH Warsaw School of Economics

Journal of Industry, Competition and Trade, 2021, vol. 21, issue 2, No 6, 225-250

Abstract: Abstract We consider process R&D investments of firms in markets with network effects and incomplete product compatibility. Our results indicate that network effects increase the firms’ individual investments in R&D. The presence of network effects weakens the positive impact of R&D cooperation on firms’ R&D investments. Further, we show that R&D competition can bring socially optimal level of investment, and this is not possible in markets without network effects. Finally, our results suggest that innovation policy oriented at promoting R&D cooperation between enterprises can be counterproductive in markets with network effects and incomplete product compatibility.

Keywords: R&D investments; Network effects; Product compatibility; Innovation policy (search for similar items in EconPapers)
JEL-codes: L1 L2 O3 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jincot:v:21:y:2021:i:2:d:10.1007_s10842-021-00357-5

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DOI: 10.1007/s10842-021-00357-5

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