We examine a vertically differentiated duopoly where firms invest in process and product innovation and then compete in … prices under full market coverage. We show that (i) process and product innovation are complements (substitutes) for the low …-quality (high-quality) firm; (ii) the firm which is initially more efficient invests more than the rival in process innovation; (iii …

We study the licensing incentives of an independent input producer owning a patented product innovation which allows …