Incentives for Process Innovation in a Collusive Duopoly

15 Pages Posted: 4 Jun 2007

See all articles by Christoph Engel

Christoph Engel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Bonn - Faculty of Law & Economics; Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students; Universität Osnabrück - Faculty of Law

Date Written: May 2007

Abstract

Two suppliers of a homogenous good know that, in the second period, they will be able to collude. Gains from collusion are split according to the Nash bargaining solution. In the first period, either of them is able to invest into process innovation. Innovation changes the status quo pay-off, and thereby affects the distribution of the gains from collusion. The resulting innovation incentive is strictly smaller than in the competitive case.

Keywords: Duopoly, Collusion, Innovation Incentives

JEL Classification: D43, K21, L13, O31

Suggested Citation

Engel, Christoph, Incentives for Process Innovation in a Collusive Duopoly (May 2007). MPI Collective Goods Preprint No. 2007/6, Available at SSRN: https://ssrn.com/abstract=991071 or http://dx.doi.org/10.2139/ssrn.991071

Christoph Engel (Contact Author)

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
+049 228 914160 (Phone)
+049 228 9141655 (Fax)

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

University of Bonn - Faculty of Law & Economics

Postfach 2220
D-53012 Bonn
Germany

Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students ( email )

Burgemeester Oudlaan 50
PO Box 1738
Rotterdam
Netherlands

Universität Osnabrück - Faculty of Law

Osnabruck, D-49069
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
81
Abstract Views
863
rank
339,269
PlumX Metrics