Product Innovation Incentives: Monopoly vs. Competition

Journal of Economics and Management Strategy - Tập 22 Số 3 - Trang 513-528 - 2013
Yongmin Chen1, Marius Schwartz2
1Department of Economics University of Colorado Boulder CO 80309
2Department of Economics, Georgetown University, Washington, D.C. 20057

Tóm tắt

In contrast to Arrow's result for process innovations, we show that the gain from a product innovation can be larger to a secure monopolist than to a rivalrous firm that would face competition from independent sellers of the old product. A monopolist incurs profit diversion from its old good but may gain more than a rivalrous firm on the new good by coordinating the prices. In a Hotelling framework, we find simple conditions for the monopolist's gain to be larger. We also explain why the ranking of innovation incentives differs under vertical product differentiation.

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Thông tin
Thông tin xuất bản

Journal of Economics and Management Strategy

Tập 22 Số 3

513-528

Thông tin tác giả