The paper analyzes the effects of more intense competition on firms' incentives to invest in process innovations. We … carry out experiments for two-stage games, where R&D investment choices are followed by product market competition. As … predicted by theory, an increase in the number of firms from two to four reduces investments. However, a positive effect is …

We argue that, in a simple setting, the relation between the intensity of competition and cost-reducing investment is U … is minimal for intermediate levels of competition, which is inversely parameterized by the extent of product … ; intensity of competition ; experiment …

-7% higher without divestitures. Up to 30% savings could have been obtained in Latin America by emulating the pro-competition …