Innovation, Market Structure, and Welfare: A Stackelberg Model

The Quarterly Review of Economics and Business, 30(1) Spring 1990, 40-53

Posted: 26 Sep 2014

See all articles by Rajeev K. Goel

Rajeev K. Goel

Illinois State University - Department of Economics

Date Written: 1990

Abstract

A Stackelberg model of production with process innovations is introduced. The leader invests in R&D; followers conduct no R&D but are able to benefit from the leader's research. It is found that the leader invests less in R&D as the fringe expands or as spillovers from research increase. The output and R&D of the Stackelberg industry fall short of the social optimum. When the Stackelberg leader is more efficient than the fringe, a few firms generate more social welfare than a large number of firms under high technological opportunity. As the technological opportunity diminishes, the welfare differences between market structures are reduced. The findings of this article lend support to the Schumpeterian hypothesis.

Suggested Citation

Goel, Rajeev K., Innovation, Market Structure, and Welfare: A Stackelberg Model (1990). The Quarterly Review of Economics and Business, 30(1) Spring 1990, 40-53. Available at SSRN: https://ssrn.com/abstract=2500922

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
281
PlumX Metrics