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This paper studies the innovation dynamics of an oligopolistic industry. The firms compete not only in the output market but also by engaging in productivity enhancing innovations to reduce labor costs. Rent sharing may generate productivity dependent wage differentials. Productivity growth...
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stage game, firms first decide on long-term R&D investment, then form research clusters according to the unanimity game … introduced in Bloch(1995), and finally compete in quantities. For some range of investment costs, equilibria with no-investment … co-exist with equilibria where a large fraction of firms invest in R&D. Because of the effects of R&D investment on …
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