Innovation and market concentration with asymmetric firms

Marc Escrihuela-Villar ()

No 2004/03, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: This paper considers a theoretical model of n asymmetric firms that reduce their initial unit costs by spending on R&D activities. In accordance with Schumpeterian hypotheses we obtain that more efficient (bigger) firms spend more in R&D and this leads to a more concentrated market structure. We also find a positive relationship between innovation and market concentration. This calls for a corrective tax on R&D activities to curtail strategic incentives to over-invest in R&D trying to achieve a higher market share.

Keywords: R&D; Asymmetries; Market Concentration; Optimal Industrial Policies (search for similar items in EconPapers)
JEL-codes: L11 L52 O31 (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: INNOVATION AND MARKET CONCENTRATION WITH ASYMMETRIC FIRMS (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:200403

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