Innovation and competition with human capital input

Abstract

As innovation relies on human capital heavily, it attaches importance to taking human capital into account while investigating the relationship between innovation and competition. This paper establishes a game theory model to capture the effects of competition on innovation with human capital. The major findings indicate that firms with larger scale are more active in innovation investment. Meanwhile, a lessening of competition is beneficial to increase innovation if human capital input is considered.Further, both the Lerner index and social welfare are reduced under less competition.

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“…Game theory, a mathematical tool used to analyze strategic interactions among rational decision-makers, is particularly relevant in understanding the complexities of human capital export (Bossaerts and Murawski, 2017;Pandey, and Chermack, 2008;Nie et al 2023). Our study applies game-theoretic principles to model the decisions faced by potential human capital exports (individuals considering migration for employment) and receiving countries.…”

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“…Other empirical studies confirmed the unidirectional causality from economic growth to innovation (Cetin, 2013;Howells, 2005;Pradhan et al, 2018;Sadraoui et al, 2014). Nie and Yang (2023) argued that innovation heavily depends on human capital and stressed the importance of considering this factor when examining the relationship between innovation and competition. Human capital has long been recognized as crucial in fostering innovation at the country and firm levels.…”

“…Nie and Yang (2023) argued that innovation heavily depends on human capital and stressed the importance of considering this factor when examining the relationship between innovation and competition. Human capital has long been recognized as crucial in fostering innovation at the country and firm levels.…”

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