This paper studies a dynamic duopoly in which firms compete in the adoption of new technologies. The innovation process …

innovation of its competitor in this way. Overall, total payoffs depend non-monotonously on the capacities on the established …

In case of a product innovation firms start producing a new product. While doing so, such a firm should decide what to … technology, increases over time. The implication is that a later innovation enables the firm to produce a better innovative … product market, the better the quality of the innovative product needs to be for the product innovation to be optimal …

homogeneous product. The firms invest in production capacities and simultaneously in R&D which determines their innovation rate … the cannibalization effect gives the smaller firm a higher innovation incentive. As a logical consequence we find that the …

We study in a dynamic framework how product innovation activities of a firm are influenced by its production capacity …