Radical Innovation and R&D Competition

Posted: 19 Dec 2009

See all articles by Maria Rosa Battaggion

Maria Rosa Battaggion

Independent

Daniela Grieco

University of Verona - Department of Economics; Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS)

Date Written: August 1, 2009

Abstract

Empirical evidence about innovation is doubtful in showing incumbent firms’ and new entrants’ attitude toward radical innovations. Moreover, theoretical works exhibit divergent conclusions when investigating the incentives to innovate. Our paper emphasizes the importance of distinguishing between degrees of innovativeness when comparing an incumbent’s and an entrant’s incentives to invest in innovation. The model captures the peculiarity of a radical innovation along three dimension: Risk, impact on the existing market and capability of opening up a new market. The results emphasize the role of substitution and complementarity between markets in determining the incentives to innovative in the radical case. Implications on innovation policy are finally discussed.

Keywords: radical innovation, R&D, competition

JEL Classification: O32, L13

Suggested Citation

Battaggion, Maria Rosa and Grieco, Daniela, Radical Innovation and R&D Competition (August 1, 2009). Rivista Italiana degli Economisti, Vol. 2, August 2009, Available at SSRN: https://ssrn.com/abstract=1525512

Daniela Grieco

University of Verona - Department of Economics ( email )

Via dell'Artigliere, 8
37129 Verona
Italy

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS)

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

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