Abstract

http://ssrn.com/abstract=1291055
 


 



Competition and Innovation: An Experimental Investigation


Armin Schmutzler


University of Zurich - Department of Economics; Centre for Economic Policy Research (CEPR)

May 2008


Abstract:     
The paper analyzes the effects of more intense competition on firms' incentives to invest in process innovations. We carry out experiments based on two-stage games, where R&D investment choices are followed by product market competition. As predicted by theory, an increase in the number of firms from two to four reduces investments. However, a positive effect is observed for a switch from Cournot to Bertrand, even though theory predicts a negative effect in the four-player case.

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Date posted: October 28, 2008  

Suggested Citation

Schmutzler, Armin, Competition and Innovation: An Experimental Investigation (May 2008). Available at SSRN: http://ssrn.com/abstract=1291055

Contact Information

Armin Schmutzler (Contact Author)
University of Zurich - Department of Economics ( email )
Zürich, CH-8006
Switzerland
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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