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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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