Coopting "decisive" technical advances

Morton I. Kamien, Israel Zang

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

The possibility of an established firm repelling a newcomer's cost reducing technical advances by providing the newcomer access to its currently superior technology, is explored. The oldtimer is supposed to offer his technology in return for the newcomer either ceasing R&D or sharing her findings. It is found that newcomers with the R&D potential to drive the oldtimer out of business cannot be coopted, but that less potent newcomers can. Whenever newcomers are deterred, the product price is higher and technical advance lower than it would be in the absence of a deal.

Original languageEnglish
Title of host publicationThe Economics of Innovation
Subtitle of host publicationIncentives, Cooperation, and R and D Policy
PublisherEmerald Group Publishing Ltd.
Pages113-128
Number of pages16
ISBN (Print)9780444532558
DOIs
StatePublished - 2008

Publication series

NameContributions to Economic Analysis
Volume286
ISSN (Print)0573-8555

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