Consider a market in which firms compete to develop a new product. While most work focuses on a single firm successfully developing the new product, the emphasis here is on possibly multiple firms devloping the new product. Thus, a firm has uncertainty about how many competitors it will face as...

A profit-maximizing monopolist licenses a cost-reducing innovation to downstream firms that compete strategically. Katz and Shapiro (1986) find the seemingly obvious result that "the [monopolist's] incentive to disseminate the innovation typically are too low." Instead, the author finds that the...