In this paper, we design two laboratory experiments to analyze the causal effects of competition on step …-by-step innovation. Innovations result from costly R&D investments and move technology up one step. Competition is inversely measured by … that increased competition leads to a significant increase in R&D investments by neck-and-neck firms. Second, increased …

solved by local competition (such as bribery, lobbying or rent seeking) among players who apply the same search strategies or … develop the same design. Such competition can restore full efficiency in the non-cooperative equilibrium. Local competition …