I study the relationship between competition and innovation, focusing on the distinction between product and process … competition and innovation, which focused on process innovations. New products allow firms to differentiate themselves from one … another. I demonstrate that the competition level that creates the most innovation incentive is higher for process innovation …

How do financial constraints influence innovative activities of firms? In a two-period model of price competition with … and might even become a monopolist in the second period of competition. If we finally assume that both firms are … financially constrained and apply for a loan at their house bank, we can show that Innovation activities are further reduced and …