Economics at your fingertips  

The Invariance of Market Innovation to the Number of Firms

Raaj Sah () and Joseph Stiglitz

RAND Journal of Economics, 1987, vol. 18, issue 1, 98-108

Abstract: This article provides a set of conditions under which the R&D undertaken in a market economy is invariant to the number (or size distribution) of firms and the market's allocation is efficient (i.e., given the aggregate expenditure, the market chooses socially optimal projects). As in several patent race studies, we assume that a "winner-takes-all" competition determines firms' gains, but our model differs from earlier studies in that firms are not restricted to undertake only one research project. Our analysis shows that how one characterizes a firm's choices (and innovation technologies) has a strong influence on the conclusions one draws from economic analyses of R&D.

Date: 1987
References: Add references at CitEc
Citations: View citations in EconPapers (22) Track citations by RSS feed

Downloads: (external link) ... O%3B2-2&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See for details.

Related works:
Working Paper: The Invariance of R&D to the Number of Firms in the Industry (1986) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Bibliographic data for series maintained by ().

Page updated 2023-12-05
Handle: RePEc:rje:randje:v:18:y:1987:i:spring:p:98-108