Incentives for Process Innovation in a Collusive Duopoly

Two suppliers of a homogenous good know that, in the second period, they will be able to collude. Gains from collusion are split according to the Nash bargaining solution. In the first period, either of them is able to invest into process innovation. Innovation changes the status quo pay-off, and thereby affects the distribution of the gains from collusion. The resulting innovation incentive is strictly smaller than in the competitive case.

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Year of publication:	2007-05
Authors:	Engel, Christoph
Institutions:	Max-Planck-Institut zur Erforschung von Gemeinschaftsgütern, Max-Planck-Gesellschaft
Subject:	Duopoly \| Collusion \| Innovation Incentives

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Extent:	application/pdf
Series:	Working Paper Series of the Max Planck Institute for Research on Collective Goods.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 2007_6 13 pages
Classification:	D43 - Oligopoly and Other Forms of Market Imperfection ; K21 - Antitrust Law ; L13 - Oligopoly and Other Imperfect Markets ; O31 - Innovation and Invention: Processes and Incentives
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005772746