Innovation Under Spatial Duopoly

Abstract

Abstract:Innovation is an important topic in economics. This paper highlights duopoly innovation under the Hotelling model with game theory approaches. This paper argues that market power, as measured by the cost advantage of a dominant fi rm over its rival, serves to enhance the incentive to innovate in a Hotelling model of spatial competition. This result implies that a fi rm with cost advantage will have a larger incentive than its rivals to further its cost advantage as new opportunities for innovation arise thereby implying that innovation increases concentration. This result is in contrast to the result obtained by Holmes et al. (2012) who use the Betrand model to show that "market power" lowers the incentive to innovate. We think that the inelastic demand causes this economic phenomenon.

Spatial Monopoly with Upgrades of Durable Goods

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The Mechanisms of Technological Innovation in Smes: A Bayesian Network Analysis of Eu Regional Policy Impact on Polish Firms

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Optimal Zoning in Spatial Differentiation

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