Sacco, Dario; Schmutzler, Armin (2008). Competition and Innovation: An Experimental Investigation. Working paper series / Socioeconomic Institute No. 807, University of Zurich.
The paper analyzes the effects of more intense competition on firms’ incentives to invest in process innovations. We carry out experiments based on two-stage games, where R&D investment choices are followed by product market competition. As predicted by theory, an increase in the number of firms from two to four reduces investments. However, a positive effect is observed for a switch from Cournot to Bertrand, even though theory predicts a negative effect in the four-player case.
The paper analyzes the effects of more intense competition on firms’ incentives to invest in process innovations. We carry out experiments based on two-stage games, where R&D investment choices are followed by product market competition. As predicted by theory, an increase in the number of firms from two to four reduces investments. However, a positive effect is observed for a switch from Cournot to Bertrand, even though theory predicts a negative effect in the four-player case.
| Item Type: | Working Paper |
|---|---|
| Communities & Collections: | 03 Faculty of Economics > Department of Economics
Working Paper Series > Socioeconomic Institute (former) |
| Dewey Decimal Classification: | 330 Economics |
| JEL Classification: | C92, L13, O31 |
| Language: | English |
| Date: | May 2008 |
| Deposited On: | 29 Nov 2011 22:47 |
| Last Modified: | 16 Aug 2021 21:19 |
| Series Name: | Working paper series / Socioeconomic Institute |
| OA Status: | Green |
| Official URL: | http://www.econ.uzh.ch/wp.html |
Sacco, Dario