Innovation and the persistence of monopoly under diseconomies of scope or scale

Flavio Delbono and Luca Lambertini ()

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2022, vol. 49, issue 4, No 4, 747-757

Abstract: Abstract We participate in the lasting debate about the persistence of monopolies under technological change, by examining two deterministic games modelling innovation auctions. We highlight some novel aspects within such debate. If product innovation is at stake, the joint effect of diseconomies of scope and product differentiation may allow the entrant to acquire the innovation and give rise to a duopoly. Process innovation is analysed in a model with increasing marginal production costs to show that the innovating monopolist always uses both technologies by virtue of Jensen’s inequality, and this is sufficient but not necessary to preserve its monopoly power.

Keywords: Process innovation; Product innovation; Auction; Sleeping patent (search for similar items in EconPapers)
JEL-codes: L13 O31 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s40812-022-00214-4

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