Incentives to Innovate in Oligopolies

Belleflamme, Paul; Vergari, Cecilia

doi:10.2139/ssrn.914152

Cited by 8 publications

(7 citation statements)

References 2 publications

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“…The model also considers the fact that knowledge is more likely to be transmitted if it is more basic, thus less firm-specific than knowledge from 6 A formal analysis of the effect of knowledge complementarities between applied and basic research is available upon request. 7 In contrast, our model cannot accommodate for innovations consisting in both the introduction of new products and changes in the degree of product differentiation (and then, the intensity of competition.) 8 If spillovers occurred directly through publications and/or patents, it would be interesting to study the firms's disclosure strategies by making the parameter  endogenous.…”

Section: Setupmentioning

confidence: 97%

“…Thus the firms' profit functions, and therefore their optimal contract decisions, will be unaffected as compared to the case developed here. 7 Fifth, notice that knowledge spillovers, in the model, do not occur directly through publications or patents. It is implicitly assumed that the firms can effectively protect their proprietary knowledge, even when it is made public through either patents or publications.…”

Section: Setupmentioning

confidence: 99%

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Individual Preferences, Organization, and Competition in a Model of R&D Incentive Provision

Lacetera¹,

Zirulia²

2011

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Understanding the organization of R&D activities requires the simultaneous consideration of scientific workers' talent and tastes, companies' organizational choices, and the characteristics of the relevant industry. We develop a model of the provision of incentives to corporate scientists, in an environment where (1) scientists engage in multiple activities when performing research; (2) knowledge is not perfectly appropriable; (3) scientists are responsive to both monetary and non-monetary incentives; and (4) firms compete on the product market. We show that both the degree of knowledge spillovers and of market competition affect the incentives given to scientists, and these effects interact. First, high knowledge spillovers lead firms to soften incentives when product market competition is high, and to strengthen incentives when competition is low. Second, the relationship between the intensity of competition and the power of incentives is U-shaped, with the exact shape depending on the degree of knowledge spillovers. We also show that the performance-contingent pay for both applied and basic research increases with the non-pecuniary benefits that scientists obtain from research. We relate our findings to the existing empirical research, and also discuss their implications for management and public policy.

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Section: Setupmentioning

confidence: 97%

Section: Setupmentioning

confidence: 99%

Individual Preferences, Organization, and Competition in a Model of R&D Incentive Provision

Lacetera¹,

Zirulia²

2011

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“…More specifically, they show that a higher entry threat increases the incumbent's investment when the firm is initially close to the technological frontier, due to the escape-entry effect; it is the other way round if the incumbent is further behind the 3 See, for example, Lee and Wild (1980) vs. Delbono andDenicolo (1991), Gilbert andSunshine (1995), Belleflamme and Vergari (2006), Sacco and Schmutzler (2007), Schmutzler (2007), Zanchettin (2008), andVives (2008). For surveys, see Aghion and Griffith (2005) or Gilbert (2006).…”

Section: Robustness-robustness Is a Central Issue In Theoretical Indmentioning

confidence: 99%

Entry and Incumbent Innovation

Weinschenk

2010

SSRN Journal

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We explore how the threat of entry influences the innovation activity of an incumbent. We show that the incumbent's investment is hump-shaped in the entry threat. When the entry threat is small and increases, the incumbent invests more to deter entry, or to make it unlikely. This is due to the entry deterrence effect.However, when the threat becomes huge, entry can no longer profitably be deterred or made unlikely and the investment becomes small. Then the Schumpeterian effect dominates. These results turn out to be very robust.

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“…26 Thus, in the case of differentiated products, the negative effect on innovation incentives via the "escape 20 See Modigliani & Miller (1958). 21 See Belleflamme & Vergari (2011). 22 See Aghion, et al (2001);Aghion, et al (2005); Bonanno & Haworth (1998);Boone (2001); Belleflamme & Vergari (2011).…”

mentioning

confidence: 99%

“…25 See Delbono & Denicolo (1990). 26 See Belleflamme & Vergari (2011). competition effect" appears to be particularly relevant, whenever the merging parties are producers of close substitutes.…”

mentioning

confidence: 99%

Mergers and the Incentives to Undertake Product Innovation Oriented R&D: First Steps Towards an Assessment Approach

Kern

Contreras²

2014

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in ABSTRACTThe firms that compete with one another in terms of innovation do not necessarily coincide with the relevant competitors on pre-innovation product markets. As a consequence, the findings about the ambiguous interrelation between (product) market concentration and innovation cannot be transferred one-to-one to the interrelationship between innovation competition and innovation. By identifying and classifying the most relevant effects, which are decisive for the impact of mergers on the incentives to invest in product innovation oriented R&D, we will demonstrate that the interrelation between innovation competition and innovation is not always as unclear as it seems. Hence, by analyzing the model-theoretic industrial organization literature, this article aims to contribute to the discussion about the development of a decision theoretic assessment framework for analyzing the impact of mergers on innovation and is therefore also in line with the idea of a rule-based competition policy which is, from a law and economics perspective, ought to reduce error costs, give legal guidance and reduce legal uncertainty.

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Incentives to Innovate in Oligopolies

Cited by 8 publications

References 2 publications

Individual Preferences, Organization, and Competition in a Model of R&D Incentive Provision

Individual Preferences, Organization, and Competition in a Model of R&D Incentive Provision

Entry and Incumbent Innovation

Mergers and the Incentives to Undertake Product Innovation Oriented R&D: First Steps Towards an Assessment Approach

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