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Stepwise Innovation by an Oligopoly

18 Pages Posted: 8 May 2017  

Richard Gilbert

University of California, Berkeley

Christian Riis

Norwegian Business School

Erlend S. Riis

University of Cambridge

Date Written: May 5, 2017


Stepwise models of technological progress described by Philippe Aghion and his co-authors (1997, 2001, 2005) capture the incentives of firms to innovate in order to escape competition and the disincentives from sharing profits with other technological leaders. The models yield intuitively appealing predictions about the effects of competition on innovation, but they are limited to competition in duopolies. This paper extends the models to oligopolies and shows that the predictions of the effects of competition on innovation from the duopoly models do not generalize to oligopolies.

Keywords: Competition, Innovation, Oligopoly

JEL Classification: L13, O31, L40

Suggested Citation

Gilbert, Richard and Riis, Christian and Riis, Erlend S., Stepwise Innovation by an Oligopoly (May 5, 2017). Available at SSRN:

Richard Gilbert (Contact Author)

University of California, Berkeley ( email )

Department of Economics
530 Evans Hall #3880
Berkeley, CA 94720
United States
510 642 1507 (Phone)

Christian Riis

Norwegian Business School ( email )

Nydalsveien 37
N-0442 Oslo
46410789 (Phone)

Erlend Riis

University of Cambridge

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

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