Forschung und Entwicklung , Externer Effekt , Netzwerk , Innovation , Marktentwicklung
Keywords (English):
Network externalities , Innovation , Imperfect Competition , Dynamic Games
Abstract:
This paper studies the incentives to undertake uncertain R&D initiatives in a dynamic duopoly network industry. It is shown that network externalities positively affect the incentives to invest in R&D. In the model, competition resembles a preemption race and, therefore, market performance implies an over-investment in R&D in comparison with the social optimum. Moreover, network externalities have an important impact in the dynamic evolution of the industry. Although in the long-run a single firm dominates the market (i.e. wins the race), short-run competition is very fierce and concentrated on neck-and-neck technological configurations. This short-run competition is fiercer and longer, the higher the level of network externalities. Policy measures that increase technological diffusion (i.e. mandatory licensing), increase the level of competition and/or prolong the short-run competition have an important positive impact on consumer welfare and on firms’ R&D incentives.
Additional information:
Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.
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