Strategic Choice between Process and Product Innovation under Different Competitive Regimes

Luigi Filippini and Gianmaria Martini

No itemq0953, DISCE - Quaderni dell'Istituto di Teoria Economica e Metodi Quantitativi from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: This paper investigates the strategic choice between introducing a process or a product innovation in a duopoly model with vertical differentiation, comparing the outcomes in case of Bertrand and Cournot competition. It is shown that under both competitive regimes three equilibria in innovation adoption may arise: two symmetric equilibria, where firms select the same innovation type, and one asymmetric equilibrium. The competitive regime has an impact on the features of the asymmetric equilibrium, since in case of Bertrand competition, the high (low) quality firm chooses a product (process) innovation, while firms make the opposite choices in case of Cournot competition. The presence of a leapfrogging effect (only in the Cournot competitors tend to favor the introduction of a new product in comparison with the Bertrand competitors.

Keywords: vertical differentiation; innovation adoption; process and product innovation; competitive regime. (search for similar items in EconPapers)
JEL-codes: D43 L15 O33 (search for similar items in EconPapers)
Pages: nn pages
Date: 2009-01
New Economics Papers: this item is included in nep-com, nep-cse, nep-ino, nep-knm, nep-mic and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.unicatt.it/Istituti/TeoriaEconomica/Quaderni/itemq0953.pdf First version, March, 2007 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Server closed connection without sending any data back (http://www.unicatt.it/Istituti/TeoriaEconomica/Quaderni/itemq0953.pdf [302 Redirect]--> https://www.unicatt.it/home-pagina-non-trovata [302 Found]--> http://www.unicatt.it/404.html)

Related works:
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: https://EconPapers.repec.org/RePEc:ctc:serie6:itemq0953

Access Statistics for this paper

More papers in DISCE - Quaderni dell'Istituto di Teoria Economica e Metodi Quantitativi from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE) Contact information at EDIRC.
Bibliographic data for series maintained by Gianluca Femminis ().