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| Author: | Kwon, I. |
| Title: | R&D portfolio and market structure |
| Journal: | Economic Journal
2010 : MAR, VOL 120:543 p. 313-323 |
| Index terms: | research COMPANIES competition innovation market conditions market structure |
| Language: | eng |
| Abstract: | This paper analyzes how firms allocate their resources when they compete for multiple patents in heterogeneous research projects simultaneously. A simple model shows that firms' resource allocation is biased away from risky and basic research, even when imitation is not possible and firms are fully rational. Therefore a market may lack major innovations despite large aggregate research expenditure and strong patent protection. This paper also shows that as a market becomes more competitive, firms invest relatively less in basic research but more in risky research. |
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