We analyze the effect of external financing and associated bankruptcy threat on the speed of product innovation in a … the R&D investment flow determines the distribution of the stochastic innovation time and the same time influences the … debt in order to speed up innovation. Furthermore, we show that, due to the existence of financial frictions, the …

homogeneous product. The firms invest in production capacities and simultaneously in R&D which determines their innovation rate … the cannibalization effect gives the smaller firm a higher innovation incentive. As a logical consequence we find that the …

We study in a dynamic framework how product innovation activities of a firm are influenced by its production capacity …