When Less Competition Induces More Product Innovation

Authors: 
Pradeep Dubey & Chien-wei Wu
Abstract: 

Consider firms which engage in Cournot competition over a common product, but can undertake innovation to improve the quality of their product. In this scenario it can often happen that innovation is discouraged by too much or too little competition, and occurs only when the industry is of intermediate size.

Date: 
June, 2001
Published in: 
Economics Letters 74 (2002), 309-312.
Number: 
255