Research and Development with Asymmetric Firm Sizes
This article presents a theoretical model of research and development (R&D) competition among firms. The goal of the model is to simultaneously explain two empirical observations pertaining to the persistence of dominant firms: small firms make a disproportionate share of major innovations, while large firms tend to spend more (in absolute terms) on R&D than small firms do. In the model here, firms choose investment levels and R&D project riskiness. In equilibrium, a large firm invests more than a smaller firm but, by choosing safer R&D projects, makes fewer major innovations.
Year of publication: |
1991
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Authors: | Rosen, Richard J. |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 22.1991, 3, p. 411-429
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Publisher: |
The RAND Corporation |
Saved in:
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