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Full-Text Articles in Social and Behavioral Sciences
Competition And Investment - A Unified Approach, Armin Schmutzler
Competition And Investment - A Unified Approach, Armin Schmutzler
Armin Schmutzler
Using a simple but general two-stage framework, this paper identifies the circumstances under which increasing competition leads to more cost-reducing investments. The framework can, for instance, capture increasing substitutability for different types of oligopoly models or changes from Cournot to Bertrand competition. The paper identifies four transmission mechanisms by which competition affects investment. For a firm with lower initial marginal costs (higher efficiency), a positive effect of competition on investment is more likely. Positive spillovers support a negative effect of competition on investment. The relation between competition and Investment is not affected in an unambiguous way by the level of …
Is Competition Good For Innovation? A Simple Approach To An Unresolved Question, Armin Schmutzler
Is Competition Good For Innovation? A Simple Approach To An Unresolved Question, Armin Schmutzler
Armin Schmutzler
The relation between the intensity of competition and R&D investmenthas received a lot of attention, both in the theoretical and in the empirical literature. Nevertheless, no consensus on the sign of the effect of competition on innovation has emerged. This survey of the literature identifies sources of confusion in the theoretical debate. My discussion is mainly based on a unified model that simplifies the comparison of different results. This model is also applied to show which factors work in favor of a positive relation between competition and innovation.