Narajabad, Borghan; Watson, Randal - In: Journal of Economic Dynamics and Control 35 (2011) 6, pp. 825-842
We study innovation in a dynamic stochastic discrete-time duopoly with endogenous horizontal differentiation. Innovation takes the form of a quality ladder; horizontal differentiation is Hotelling competition. We compute Markov-perfect equilibria and study the effects on long-run innovation of...