Essays on technological change and innovation games
The objectives of this dissertation is to provide a theory of innovation and technological change incorporating the following aspects; (i) the impact of the existence of substitutes and complements on the innovation incentives in presence of technological externalities, in a Cournot Nash game theoretic framework. Process innovation theory has focused predominantly on changes in the production possibility set of industrial structures producing homogenous goods. Indeed, firms are assumed to produce identical goods at the same fixed marginal cost. However, one argue that in such case having more than a single firm serving the market leads likely to a social waste in term of fixed cost, and hence the monopolization of the industry prevents a wasteful duplication of fixed costs. (ii) the influence of increasing marginal costs production technologies on the innovation and production behavior for finite size industries as well for competitive market structures, using an n-firm Cournot Nash game. It is shown that as more firms are added to the market the rate of private innovation decreases. Furthermore, the market solution is asymptotically efficient in absence of spillovers. This result however does not hold for a finite size industry. In the presence of significant spillovers, the market solution diverges from the socially desirable level and the rate of divergence depends positively on the magnitude of the spillovers parameter. (iii) cooperation versus noncooperation in research and development in presence of spillovers in the case of industrial structures which are not necessarily homogenous. Findings support the theory that both the noncooperative and the cooperative solution do not yield the socially desired innovative effort. It is shown also that the idea cooperative induces in aggregate more innovation effort than in the noncooperation case, depends on the production structure as captured by the degree of heterogeneity.