Innovation is typically a trial-and-error process. While some research paths lead to the innovation sought, others result in dead ends. Because firms benefit from their competitors working in the wrong direction, they do not reveal their dead-end findings. Time and resources are wasted on...

We demonstrate the possibility of shake-out of firms and emergence of inter-firmheterogeneity along the (socially optimal) dynamic equilibrium path of a competitive industry with freeentry and exit, even when there is no uncertainty and all firms are ex ante identical with perfectforesight....

This paper investigates the impact of technical progress on the relationship between competition an investment. Using a model of oligopoly competition with differentiated products where firms invest to reduce their marginal cost of production, I find that technical progress, which increases the...

This paper investigates the impact of technical progress on the relationship between competition an investment. Using a model of oligopoly competition with di¤erentiated products where firms invest to reduce their marginal cost of production, I find that technical progress, which increases the...

This paper investigates the impact of technical progress on the relationship between competition an investment. The competition is measured as the degree of substitutability and technical progress enlarges the size of innovation in cost reduction. In a context of duopoly, technical progress...

In the modern theory of growth, monopoly plays a crucial role both as a cause and an effect of innovation. Innovative firms, it is argued, would have insufficient incentive to innovate should the prospect of monopoly power not be present. This theme of monopoly runs throughout the theory of...

This paper argues that drugs are expensive not because of a lack of competition among research-based pharmaceutical companies, but because of a lack of competition in the drug approval process. Lack of competition in the drug approval process has led to exceedingly high drug development costs....

We study adoption of a costly new technology when the profitability of the new technique differs over individuals and there is uncertainty about these individual-specific differences. We establish that such individual-specific uncertainty results in a financing constraint when debt contracts are...

Firms learn imperfectly about their cost of investment. We study how this information affects firms’ incentives to invest in R&D by comparing investments and profits under public and private information. Revenue sharing between the winner and loser of the race, e.g. through licensing...

Players often engage in high-profile public communications to demonstrate their confidence of winning before they carry out actual competitive activities. This paper investigates players' incentives to conduct such pre-contest communication. We assume that a player suffers a cost when he sends a...