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R&D Incentives and Market Structure: Dynamic Analysis

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Abstract

We investigate dynamic R&D for process innovation in an oligopoly where firms invest in cost-reducing activities. We focus on the relationship between R&D intensity and market structure, proving that the industry R&D investment increases monotonically with the number of firms. This Arrowian result contradicts the established wisdom acquired from static games on the same topic.

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Authors and Affiliations

  1. Professor of Economics, Department of Economics, University of Catania, Catania, Italy

    R. Cellini

  2. Professor of Economics, Department of Economics, Fellow, ENCORE, Department of Economics, University of Bologna, University of Amsterdam, Bologna, Amsterdam, Italy, Netherlands

    L. Lambertini

Authors
  1. R. Cellini
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  2. L. Lambertini
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Additional information

The authors thank Jeroen Hinloopen and George Leitmann for useful comments and discussions

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Cellini, R., Lambertini, L. R&D Incentives and Market Structure: Dynamic Analysis. J Optim Theory Appl 126, 85–96 (2005). https://doi.org/10.1007/s10957-005-2659-0

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  • DOI: https://doi.org/10.1007/s10957-005-2659-0

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