| Author/Presenter |
Alexander Steinmetz (University of Toronto) |
| Title |
Competition, Innovation and the Effect of Knowledge Accumulation |
| Abstract |
Innovation is an instrument for competitive advantage and often seen as one or even the engine for growth. Therefore it is crucial to understand its determinants. The questions this paper addresses is how the market structure evolves due to innovative activities when firms' level of technological competence is valuable for more than one project. I develop a dynamic step by step innovation model with history dependency. Firms can accumulate knowledge by investing in R&D. I show that the resulting effect of knowledge induces technological leaders to rest on their laurels which allows followers to catch up. This causes an equilibrium where the incentives to innovate are highest when competition is most intense. |
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