Technology Strategy And Product Diversity

Xiangkang Yin

Economics of Innovation and New Technology, 1998, vol. 7, issue 2, 159-175

Abstract: This paper considers a three-stage game of a differentiated oligopoly: firms first make their entry decisions, then they choose production technologies and in the third stage of the game they decide product prices. The technology choice can be understood as selecting one from a pool of those recently available as well as developing a new technology through innovative activities. The resulting market equilibrium is then compared with the social optimum. The main conclusions are that a monopolistically competitive market will typically undersupply both product variety and production scale. R&D competition in a free entry differentiated oligopoly will lead to insufficient R&D investment at firm and industry levels.

Keywords: Monopolistic competition; Technology choice; R&D competition; Differentiated goods JEL Classification: D43; L13; O31 (search for similar items in EconPapers)
Date: 1998
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Working Paper: Technology Strategy and Product Diversity (1996)
Working Paper: Technology Strategy and Product Diversity (1996)
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DOI: 10.1080/10438599800000032

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