Innovation and market concentration with asymmetric firms

  • This paper considers a theoretical model of n asymmetric firms that reduce their initial unit costs by spending on R&D activities. In accordance with Schumpeterian hypotheses we obtain that more efficient (bigger) firms spend more in R&D and this leads to a more concentrated market structure. We also find a positive relationship between innovation and market concentration. This calls for a corrective tax on R&D activities to curtail strategic incentives to over-invest in R&D trying to achieve a higher market share. Klassifikation: L11, L52, O31 . February, 2004.

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Author:Marc Escrihuela-Villar
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2004,03
Series (Serial Number):CFS working paper series (2004, 03)
Document Type:Working Paper
Year of Completion:2004
Year of first Publication:2004
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/06/13
Tag:Asymmetries; Market Concentration; Optimal Industrial Policies; R&D
GND Keyword:Stückkosten; Forschung und Entwicklung
Issue:February, 2004
Source:CFS working paper ; 2004,03
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht