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 language | English (US) |
|---|---|
| Pages (from-to) | 221-247 |
| Number of pages | 27 |
| Journal | International Journal of Industrial Organization |
| Volume | 65 |
| DOIs | |
| State | Published - Jul 2019 |
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