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Competition in Product Design: An Experiment Exploring Innovation Behavior

29 Pages Posted: 13 Oct 2009  

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

Abstract

We experimentally investigate competition for innovations in a patent race scenario. Pairs of subjects compete as seller firms on a duopoly market, investing in risky search. Successful innovations resulting thereof are rewarded via temporary monopoly rents. Classifying investor types reveals that most of them invest according to objective investment criteria, such as probability of search success and cash flow, as well as to non-pecuniary criteria, such as intensity of competition and relative performance. For a minority, however, no such correlation is ascertained.

Suggested Citation

Cantner, Uwe and Guth, Werner and Nicklisch, Andreas and Weiland, Torsten, Competition in Product Design: An Experiment Exploring Innovation Behavior. Metroeconomica, Vol. 60, Issue 4, pp. 724-752, November 2009. Available at SSRN: https://ssrn.com/abstract=1487782 or http://dx.doi.org/10.1111/j.1467-999X.2009.04057.x

Uwe Cantner

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

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