Download this Paper Open PDF in Browser

Competition in Product Design: An Experiment Exploring Innovation Behavior

27 Pages Posted: 5 Oct 2007 Last revised: 3 Sep 2013

Uwe Cantner

Friedrich Schiller University Jena

Werner Guth

Max Planck Institute of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Andreas Nicklisch

University of Hamburg - School of Business, Economics and Social Sciences; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods

Torsten Weiland

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

Date Written: May 7, 2007

Abstract

We experimentally investigate competition in innovation in a patent race scenario. Pairs of subjects compete as seller firms on a duopoly market, engaging in risky search investments. Successful innovation is rewarded through temporary monopoly rents. Throughout the interaction, subjects receive feedback on own and other's search success and profit margin. Partitioning subjects into subgroups of investor types reveals that the majority of subjects condition investments on the degree of competition as measured by sales shares, while for others no correlation is ascertained. Heterogeneity in individual risk attitudes and differing experiences with related search tasks may explain this finding.

Keywords: innovation, competition, imitation, patent race

JEL Classification: D81, L11, O31

Suggested Citation

Cantner, Uwe and Guth, Werner and Nicklisch, Andreas and Weiland, Torsten, Competition in Product Design: An Experiment Exploring Innovation Behavior (May 7, 2007). Jena Economic Research Paper No. 2007-014. Available at SSRN: https://ssrn.com/abstract=1019224 or http://dx.doi.org/10.2139/ssrn.1019224

Uwe Cantner (Contact Author)

Friedrich Schiller University Jena ( email )

Fuerstengraben 1
Jena, Thuringa 07743
Germany

Werner Güth

Max Planck Institute of Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Andreas Nicklisch

University of Hamburg - School of Business, Economics and Social Sciences ( email )

Von-Melle-Park 5
Hamburg, D-20354
Germany

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany
49 228 9141679 (Phone)
49 228 9141655 (Fax)

HOME PAGE: http://www.coll.mpg.de/nicklisch.html

Torsten Weiland

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

Paper statistics

Downloads
115
Rank
204,500
Abstract Views
965