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R&D productivity and the nexus between product differentiation and innovation: theory and experimental evidence

Ioannou, Christos A., Makris, Miltiadis, Ornaghi, Carmine (2021) R&D productivity and the nexus between product differentiation and innovation: theory and experimental evidence. Journal of Economic Behavior and Organization, 186 . pp. 135-151. ISSN 0167-2681. (doi:10.1016/j.jebo.2021.03.027) (KAR id:87283)

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Official URL:
https://doi.org/10.1016/j.jebo.2021.03.027

Abstract

The present study proposes a theoretical model that investigates how R&D productivity influences the relationship between product substitutability and R&D investment in a duopolistic market. We argue that the effects on R&D investment are more complex than the previous literature suggests. We show theoretically that, in unlevelled industries, the laggard’s R&D investment decreases with product substitutability regardless of the R&D productivity level. In sharp contrast, in levelled industries, whether R&D investment increases or decreases with product substitutability depends crucially on the level of the R&D productivity. We choose parameters and formulate testable predictions that we take to the laboratory. We find that subjects’ behavior is largely consistent with the model’s predictions.

Item Type: Article
DOI/Identification number: 10.1016/j.jebo.2021.03.027
Uncontrolled keywords: Duopoly, R&D Productivity, Product Substitutability, Experiments
Subjects: H Social Sciences
Divisions: Divisions > Division of Human and Social Sciences > School of Economics
Depositing User: Miltos Makris
Date Deposited: 23 Mar 2021 15:40 UTC
Last Modified: 18 Apr 2022 23:00 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/87283 (The current URI for this page, for reference purposes)
Makris, Miltiadis: https://orcid.org/0000-0003-1021-841X
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