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Impact of Technical Progress on the relationship between Competition and Investment

François Jeanjean ()

29th European Regional ITS Conference, Trento 2018 from International Telecommunications Society (ITS)

Abstract: This paper investigates the impact of technical progress on the relationship between competition an investment. Using a model of oligopoly competition with di¤erentiated products where firms invest to reduce their marginal cost of production, I find that technical progress, which increases the impact of investment on cost reduction, decreases the level of competition that maximizes investment of the industry. This feature holds also for consumer surplus and Welfare. In the model, competition is measured either by the number of competitors or by the degree of substitutability between o¤ers. Result holds for both measures.Two parametric examples illustrate these features.

Keywords: Market structure; Investment; technical progress; competition (search for similar items in EconPapers)
JEL-codes: D21 D43 D92 L13 O31 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-com
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