Durable Goods, Innovation and Network Externalities

Arbeitspapier

We develop a model of R&D competition between an incumbent and a potential entrant with network externalities and durable goods. We show that the threat of entry eliminates the commitment problem that an incumbent may face in its R&D decision due to the goods? durability. Moreover, a potential entrant over-invests in R&D and an established incumbent might exhibit higher, equal or lower R&D investments in comparison with the social optimum. In our model, the incumbent?s commitment problem and the efficiency of its R&D level are determined by the extent of the network externalities.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 07-086

Classification and Topics

• Classification: Wirtschaft ; Innovation and Invention: Processes and Incentives ; Oligopoly and Other Imperfect Markets ; Network Formation and Analysis: Theory ; Firm Behavior: Theory
• Subject: Network externalities ; Durable Goods ; Innovation ; Imperfect Competition ; Innovationswettbewerb ; Potenzieller Wettbewerb ; Dauerhaftes Konsumgut ; Network Externalities ; Industrielle Forschung ; Investition ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cerquera Dussán, Daniel
• Event: Veröffentlichung
• (who): Zentrum für Europäische Wirtschaftsforschung (ZEW)
• (where): Mannheim
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/24670
• Last update: 10.03.2025, 11:44 AM CET