Strategic R&D investment, competitive toughness and growth

Claude d'Aspremont, Rodolphe Dos Santos Ferreira and Louis-André Gérard-Varet

No 2004014, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We develop an overlapping generations model, where firms (as consumers) have a two-period life, investing in R&D during the first period and competing in the product market in the second period. The number of firms is endogenously determined and the set of successful firms by a Bernoullian random process. We show the possibility of an inverted-U relationship between innovation and product market competition for an individual industry, based on the possibility for non-successful firms to remain productive. When the relative cost advantage of successful firms is large (large innovation step or small spillovers) this possibility results from the probabilistic nature of the model.

Keywords: competitive toughness; R&D incentives; strategic investment; endogenous growth (search for similar items in EconPapers)
JEL-codes: L11 L16 O32 O41 (search for similar items in EconPapers)
Date: 2004-04
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Strategic R&D investment, competitive toughness and growth (2010)
Working Paper: Strategic R&D investment, competitive toughness and growth (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2004014

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