Governance structure, technical change, and industry competition

We develop a model to study the impact of corporate governance on investment decisions firms and competition in an industry populated by publicly owned firms. A bargaining process between firm’s stakeholders determines optimal allocation financial resources real investments R&D shares buybacks. characterize relation strategy we how different structures shape technical progress over industrial life cycle. Numerical simulations calibrated set-up show that pooling together industries characterized heterogeneous generate well-documented inverted-U shaped innovation.