Competition and innovation: An experimental investigation
نویسندگان
چکیده
The paper analyzes the e¤ects of more intense competition on rmsincentives to invest in process innovations. We carry out experiments for two-stage games, where R&D investment choices are followed by product market competition. As predicted by theory, an increase in the number of rms from two to four reduces investments. However, a positive e¤ect is observed for a switch from Cournot to Bertrand, even though theory predicts a negative e¤ect in the fourplayer case. This result reects overinvestment in the Bertrand case. The results arise both in treatments in which both stages are implemented and in treatments in which only one stage is implemented. JEL Classi cation: C92, L13, O31.
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