Abstract

http://ssrn.com/abstract=1291108
 
 

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The Effects of Competition on Investment - Towards a Taxonomy


Armin Schmutzler


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

April 2008


Abstract:     
Using a general two-stage framework, this paper gives sufficient conditions for increasing competition to have negative or positive effects on R&D-investment, respectively. Both possibilities arise in plausible situations, even if one uses relatively narrow concepts of increasing competition. The paper also shows that competition is more likely to increase the investments of leaders than those of laggards. When R&D-spillovers are strong, competition is less likely to increase investments. The paper also identifies conditions under which low initial levels of competition make a positive effects of competition on investment more likely.

Keywords: competition, investment, cost reduction

JEL Classification: L13, L20, L22

working papers series


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Date posted: October 28, 2008  

Suggested Citation

Schmutzler, Armin, The Effects of Competition on Investment - Towards a Taxonomy (April 2008). Available at SSRN: http://ssrn.com/abstract=1291108

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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