The Road Not Taken: Competition and the R&D Portfolio
University of Zurich Department of Economics Working Paper No. 127
68 Pages Posted: 4 Jul 2013 Last revised: 26 Aug 2015
Date Written: August 2015
Abstract
This article examines the effects of market structure on the variety of research projects undertaken and the amount of duplication of research. A characterization of the equilibrium market portfolio of R&D projects and the socially optimal portfolio is provided. It is shown that a merger decreases the variety of developed projects and decreases the amount of duplication of research. An increase in the intensity of competition among firms leads to an increase in the variety of developed projects and a decrease in the amount of duplication of research.
Keywords: Innovation, competition, R&D portfolio, market structure
JEL Classification: L13, L22, O31
Suggested Citation: Suggested Citation