The Arrow Effect under Competitive R&D
نویسنده
چکیده
This paper shows that standard Schumpeterian theory does not imply that the incumbent monopolist has too little incentive to carry out R&D aimed at displacing its own product. If the patent holder is rational as is any other R&D investor, she will know that in equilibrium her patent’s obsolescence shall not be affected by her own R&D investment, because all the R&D firms operate under perfect competition and constant returns to scale at the private level. This reconciles Schumpeterian theory with the empirical evidence on innovation by incumbents. It is proved that the usual macroeconomic implications maintain their validity.
منابع مشابه
The computation of approximate competitive equilibrium is PPAD-hard
Arrow and Debreu showed in 1954 that, under mild conditions, a competitive economy always has an equilibrium. In this paper, we show that, given a competitive economy that fully respects all the conditions of Arrow-Debreu’s existence theorem, for any positive constant h > 0, it is PPAD-hard to compute a 1 nh -approximate competitive equilibrium.
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