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Competition and Innovation
- Publisher
- de Gruyter
- Copyright
- Copyright © 2014 by the
- ISSN
- 2194-6108
- eISSN
- 1935-1682
- DOI
- 10.1515/bejeap-2012-0013
- Publisher site
- See Article on Publisher Site
Abstract
Abstract This paper examines how the degree of competition affects incentives to innovate in product quality in a symmetric Cournot oligopolistic model. We model product quality in a quality-ladder framework and find an inverted-U shaped relationship between the number of firms in an industry and R&D efforts in innovation. We test this theoretical prediction using firm-level data for Eastern European and Central Asian countries from the Business Environment and Enterprise Performance Survey and find strong support for it.
Journal
The B.E. Journal of Economic Analysis & Policy – de Gruyter
Published: Jul 1, 2014