Innovation and competition: The role of the product market

Guillermo Marshall, Álvaro Parra

Research output: Contribution to journalArticle

Abstract

We study how competition impacts innovation (and welfare) when firms compete both in the product market and in innovation development. This relationship is complex and may lead to scenarios in which a lessening of competition increases R&D and consumer welfare in the long run. We provide conditions for when competition increases or decreases industry innovation and welfare. These conditions are based on properties of the product market payoffs. Implications for applied work and policy are discussed.

Original languageEnglish (US)
Pages (from-to)221-247
Number of pages27
JournalInternational Journal of Industrial Organization
Volume65
DOIs
StatePublished - Jul 2019

Fingerprint

Innovation
Product market
Industry
Consumer welfare
Scenarios

Keywords

  • Competition policy
  • Dynamic oligopoly
  • Merger review
  • Product market competition
  • Sequential innovation

ASJC Scopus subject areas

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

Cite this

Innovation and competition : The role of the product market. / Marshall, Guillermo; Parra, Álvaro.

In: International Journal of Industrial Organization, Vol. 65, 07.2019, p. 221-247.

Research output: Contribution to journalArticle

Marshall, Guillermo ; Parra, Álvaro. / Innovation and competition : The role of the product market. In: International Journal of Industrial Organization. 2019 ; Vol. 65. pp. 221-247.
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