Manuscript received 22.1.07; final version received 27.11.07.
INCENTIVES TO INNOVATE IN OLIGOPOLIES
Version of Record online: 16 DEC 2010
© 2010 The Authors. The Manchester School © 2010 Blackwell Publishing Ltd and The University of Manchester
The Manchester School
Special Issue: Product/Process Innovation and Market Structure
Volume 79, Issue 1, pages 6–28, January 2011
How to Cite
BELLEFLAMME, P. and VERGARI, C. (2011), INCENTIVES TO INNOVATE IN OLIGOPOLIES. The Manchester School, 79: 6–28. doi: 10.1111/j.1467-9957.2009.02131.x
- Issue online: 16 DEC 2010
- Version of Record online: 16 DEC 2010
In the spirit of Arrow (The Rate and Direction of Inventive Activity, Princeton, NJ, Princeton University Press, 1962), we examine, in an oligopoly model with horizontally differentiated products, how much a firm is willing to pay for a process innovation that it would be the only one to use. We show that different measures of competition (number of firms, degree of product differentiation, Cournot vs. Bertrand) affect incentives to innovate in non-monotonic, different and potentially opposite ways.