Competition and Innovation in Product Quality: Theory and Evidence from Eastern Europe and Central Asia
This paper examines how the degree of competition affects incentives to innovate in product quality in a symmetric Cournot oligopolistic model. We model product quality in a quality-ladder framework and find an inverted-U shaped relationship between the number of firms in an industry and R&D efforts in innovation. We test this theoretical prediction using firm-level data for Eastern European and Central Asian countries from the Business Environment and Enterprise Performance Survey and find strong support for it.
Year of publication: |
2014
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Authors: | Nur, Karaman Fatma ; Sajal, Lahiri |
Published in: |
The B.E. Journal of Economic Analysis & Policy. - De Gruyter, ISSN 1935-1682. - Vol. 14.2014, 3, p. 36-36
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Publisher: |
De Gruyter |
Saved in:
Online Resource
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