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Title:Durable Goods, Innovation and Network Externalities PDF Logo
Authors:Cerquera Dussán, Daniel
Issue Date:2007
Series/Report no.:ZEW Discussion Papers 07-086
Abstract: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.
Subjects:Network externalities
Durable Goods
Innovation
Imperfect Competition
JEL:O31
L13
D85
D21
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des ZEW
ZEW Discussion Papers

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