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EnglishI study a game in which two firms create independent divisions, then they choose whether to do R&D so as to reduce their divisions’ marginal costs, and then the divisions compete in the market. I provide necessary and sufficient conditions under which the game has an equilibrium in pure strategies, and I show that the game has an equilibrium only if each firm threatens that if the rival creates more divisions it will use R&D to foreclose the market. The case we find in the literature, in which firms flood the market with their divisions, should happen only in industries with low returns to R&D.
Tesoriere A. (2020). Drastic innovation reduces firms’ incentives to create divisions. ECONOMIA POLITICA.
| Data di pubblicazione: | 2020 |
| Titolo: | Drastic innovation reduces firms’ incentives to create divisions |
| Autori: | TESORIERE, Antonio (Corresponding) |
| Citazione: | Tesoriere A. (2020). Drastic innovation reduces firms’ incentives to create divisions. ECONOMIA POLITICA. |
| Rivista: | |
| Digital Object Identifier (DOI): | http://dx.doi.org/10.1007/s40888-020-00176-7 |
| Abstract: | I study a game in which two firms create independent divisions, then they choose whether to do R&D so as to reduce their divisions’ marginal costs, and then the divisions compete in the market. I provide necessary and sufficient conditions under which the game has an equilibrium in pure strategies, and I show that the game has an equilibrium only if each firm threatens that if the rival creates more divisions it will use R&D to foreclose the market. The case we find in the literature, in which firms flood the market with their divisions, should happen only in industries with low returns to R&D. |
| Appare nelle tipologie: | 1.01 Articolo in rivista |
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|---|---|---|---|---|
| Tesoriere_EPOL.pdf | Versione Editoriale | Administrator Richiedi una copia |
http://hdl.handle.net/10447/423937
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