Reference : R\&D Investment, Market Structure, and Industry Growth
Reports : External report
Business & economic sciences : Microeconomics
R\&D Investment, Market Structure, and Industry Growth
Koulovatianos, Christos mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Mirman, Leonard J. [> >]
University of Cyprus Department of Economics
[en] R\&D investment; Cournot competition; oligopolistic non-cooperative dynamic games
[en] We study how alternative market structures influence market supply and R\&D investment decisions of firms operating in dynamic imperfectly competitive environments. Firms can reduce their future production cost through R\&D investment today, which is the engine of endogenous industry growth. Our framework enables us to identify key strategic ingredients in firms dynamic competitive behavior through analytical characterizations. These ingredients are a static market externality, stemming from the standard oligopolistic Cournot competition, a dynamic externality that arises due to knowledge spillovers, and a dynamic market externality that comes from the interaction of knowledge spillovers with future market oligopolistic competition that firms internalize while making decisions. We isolate the impact of each strategic ingredient by comparing four alternative market structures.
University of Cyprus Working Papers in Economics

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