Innovation and product market concentration : Schumpeter, Arrow and the inverted-U shape curve

Flavio Delbono, Luca Lambertini

We investigate the relationship between market concentration and industry innovative effort within a familiar two-stage model of R&D race in which firms compete à la Cournot in the product market. With the help of numerical simulations, we show that such a setting is rich enough to generate Arrovian, Schumpeterian and inverted-U curves. We interpret these different patterns on the basis of the rela- tive strength of the technological incentive and the strategic incentive.

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Year of publication:	June 5, 2017
Authors:	Delbono, Flavio ; Lambertini, Luca
Publisher:	Bologna, Italy : Alma Mater Studiorum - Università di Bologna, Department of Economics
Subject:	innovation \| market structure \| aggregate investment \| Unternehmenskonzentration \| Market concentration \| Wettbewerb \| Competition \| Innovation \| Industrieforschung \| Industrial research \| Schumpeterismus \| Schumpeterian approach \| Theorie \| Theory