Czarnitzki, Dirk; Etro, Federico Gabriele; Kraft, Kornelius - Zentrum für Europäische Wirtschaftsforschung (ZEW) - 2008
We develop a simple model of competition for the market that shows that, contrary to the Arrow view, endogenous entry threat in a market induces the average firm to invest less in R&D and the incumbent leader to invest more. We test these predictions with a Tobit model based on a unique dataset...
