competition. The model is built on the assumption of a product market and has not yet been empirically tested on service …&D. Finally, as competition increases, small firms tend to seek more strategic alliances with competitors while large firms tend … capacity to handle innovation projects internally and as competition increases, so does the payoff of an edge to competitors. …

This paper concerns the operation of competition in the presence of a high rate of innovation and increasing returns …. Given free competition there is likely to exist, in this case, a tendency towards what may be called ‘dynamic equilibrium … this investment yields only a normal return. Thus, competition, increasing returns and innovation may co-exist. …

between product market competition and the level of innovative activity in an industry. Recent empirical papers point to an … inverted-U shape relationship between competition and innovation. Our paper offers theoretical support to these results while … show that firms solve this trade-off precisely so as to generate the inverted-U shape relationship. When the competition in …