Process and product innovation in a vertically differentiated industry

Bacchiega, Emanuele ; Lambertini, Luca ; Mantovani, Andrea (2007) Process and product innovation in a vertically differentiated industry. Bologna: Dipartimento di Scienze economiche DSE, p. 20. DOI 10.6092/unibo/amsacta/4701. In: Quaderni - Working Paper DSE (583). ISSN 2282-6483.
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Abstract

We examine a vertically differentiated duopoly where firms invest in process and product innovation and then compete in prices under full market coverage. We show that (i) process and product innovation are complements (substitutes) for the low-quality (high-quality) firm; (ii) the firm which is initially more efficient invests more than the rival in process innovation; (iii) if the initial differential between marginal costs is sufficiently high, the demand for the less efficient firm is nil and the duopoly equilibrium does not exist.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Bacchiega, Emanuele
Lambertini, Luca
Mantovani, Andrea
Keywords
vertical differentiation; quality; R&D
Subjects
ISSN
2282-6483
DOI
Deposit date
26 Feb 2016 12:35
Last modified
26 Feb 2016 12:35
URI

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