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| Title: | | Durable Goods, Innovation and Network Externalities  |
| 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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