Purpose – This paper aims to discuss whether product research and development (R&D) in developed economies tends to be too high compared with the socially desired level. Design/methodology/approach – In this context, a model of vertical and horizontal product differentiation within the...

Purpose – This paper aims to discuss whether product research and development (R&D) in developed economies tends to be too high compared with the socially desired level. Design/methodology/approach – In this context, a model of vertical and horizontal product differentiation within the...

This paper discusses a model of the New Economic Geography, in which the seminal core-periphery model of Krugman [Krugman, P., 1991, Increasing returns and economic geography, Journal of Political Economy 99, 483-499.] is extended by endogenous research activities. Beyond the common 'anonymous'...