We model the optimal behaviour of a multiproduct monopolist investing both in process and in product innovation in a dynamic setting. Product innovation reduces the degree of substitutability between any two varieties. First, we find that R&D efforts increase in both directions as the number of...

We argue that it is the number of agents holding market power, rather than the presence of market power itself, that may force Ricardian economies into autarchy. We apply the concepts of monopoly equilibrium by Baldwin (1948) to the model of Cordella and Gabszewicz (1997) to show that,...