We develop a model of R&D competition between an incumbent and a potential entrant with network externalities and durable goods. We show that the threat of entry eliminates the commitment problem that an incumbent may face in its R&D decision due to the goods’ durability. Moreover, a potential entrant over-invests in R&D and an established incumbent might exhibit higher, equal or lower R&D investments in comparison with the social optimum. In our model, the incumbent’s commitment problem and the efficiency of its R&D level are determined by the extent of the network externalities.
Additional information:
Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.
![[img]](https://madoc.bib.uni-mannheim.de/style/images/fileicons/application_pdf.png)
Search Authors in