Game Theoretic Approaches

This paper discusses the use of game-theoretic methods in the study of technical change. It focuses on the role of two key incentives: the profit incentive and the competitive threat. These forces, which are outlined in Section 1, feature prominently in the discussion of Sections 2 and 3 on explicit models of innovation. However, we seek to show how an understanding of these effects also helps in the analysis of licensing and diffusion. These topics are covered in Sections 4 and 5. Section 6 concludes.