Product Innovation Incentives
Author | : Yongmin Chen |
Publisher | : |
Total Pages | : 0 |
Release | : 2013 |
ISBN-10 | : OCLC:1376036976 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book Product Innovation Incentives written by Yongmin Chen and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In contrast to Arrow's result for process innovations, we show that the gain from a product innovation can be larger to a secure monopolist than to a rivalrous firm that would face competition from independent sellers of the old product. A monopolist incurs profit diversion from its old good but may gain more than a rivalrous firm on the new good by coordinating the prices. In a Hotelling framework, we find simple conditions for the monopolist's gain to be larger. We also explain why the ranking of innovation incentives differs under vertical product differentiation.