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

Flavio Delbono () and Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We investigate the relationship between market concentration and industry innovative effort within a familiar two-stage model of R&D race in which fi rms 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.

JEL-codes: L13 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ino, nep-mic and nep-tid
Date: 2017-06
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