This paper explores the effects of innovation efficiency on technology gap and product diversity between a leading firm and its competitor. Our analysis shows some interesting results: when innovation efficiency is sufficiently large and increases, the leading firm may expand technology gap, and...

The literature has established two kinds of entry bias in imperfectly competitive markets. First, free entry may lead to excessive entry relative to the socially optimal level. Second, free entry may lead to the wrong technology (type of firm) in the market compared to the socially optimal...

We consider a theoretical setting in which firms carry multiple products and consumers incur evaluation costs, not only across firms, but also within firms. Consumers judiciously decide the number of firms to include in their consideration sets as well as how many products from those firms. This...