PROCESS AND PRODUCT INNOVATION IN A VERTICALLY DIFFERENTIATED INDUSTRY-Reference-Cited by-同舟云学术

PROCESS AND PRODUCT INNOVATION IN A VERTICALLY DIFFERENTIATED INDUSTRY

Published:2011-06 Issue:02 Volume:13 Page:209-221
ISSN:0219-1989
Container-title:International Game Theory Review
language:en
Short-container-title:Int. Game Theory Rev.

Author:

BACCHIEGA EMANUELE¹,LAMBERTINI LUCA²,MANTOVAINI ANDREA²

Affiliation:

1. Department of Economics, University of Bologna, Piazza Scaravilli 2, 40126 Bologna, Italy

2. Department of Economics, University of Bologna, Strada Maggiore 45, 40125 Bologna, Italy

Abstract

We examine a vertically differentiated duopoly where firms invest in process and product innovation and then compete in prices under full market coverage. We show that (i) process innovation fosters (hinders) product innovation for the low-quality (high-quality) firm; (ii) the firm which is initially more efficient invests more than the rival in process innovation; (iii) if the initial differential between marginal costs is sufficiently high, the demand for the less efficient firm is nil and the duopoly equilibrium does not exist.

Publisher

World Scientific Pub Co Pte Lt

Subject

Statistics, Probability and Uncertainty,Business and International Management,General Computer Science

Link

https://www.worldscientific.com/doi/pdf/10.1142/S0219198911002952

Reference39 articles.

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