Is Competition Good for Innovation? A Simple Approach to an Unresolved Question

Armin Schmutzler

Foundations and Trends(R) in Microeconomics, 2010, vol. 5, issue 6, 355-428

Abstract: The relation between the intensity of competition and R&D investment has received a lot of attention, both in the theoretical and in the empirical literature. Nevertheless, no consensus on the sign of the effect of competition on innovation has emerged. This survey of the literature identifies sources of confusion in the theoretical debate. My discussion is mainly based on a unified model that simplifies the comparison of different results. This model is also applied to show which factors work in favor of a positive relation between competition and innovation.

Keywords: Competition; Investment; Cost reduction; Industrial organization; Technology and innovation; Public policy (search for similar items in EconPapers)
JEL-codes: L13 L2 L22 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (20)

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