Innovation and product market concentration: Schumpeter, arrow, and the inverted U-shape curve

Lessons from schumpeterian growth theory

Flavio DelbonoBy and Luca Lambertini ()

Oxford Economic Papers, 2022, vol. 74, issue 1, 297-311

Abstract: We investigate the relationship between market concentration and industry innovative effort within a familiar two-stage model of R&D race in which firms compete à la Cournot in the product market. With the help of numerical simulations, we show that such a setting is rich enough to generate Arrovian, Schumpeterian, and inverted U curves. We interpret these different patterns on the basis of the relative strength of the technological incentive and the strategic incentive. We then bridge our theoretical results and some recent empirical research.

JEL-codes: L13 O3 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Working Paper: Innovation and product market concentration: Schumpeter, Arrow and the inverted-U shape curve (2017)
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