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Title:
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Innovation or Imitation? The effect of spillovers and competitive pressure on firms' R&D strategy choice
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Author:
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Slivko, Olga; Theilen, Bernd
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Other authors:
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Universitat Rovira i Virgili. Departament d'Economia; Universitat Rovira i Virgili. Centre de Recerca en Economia Industrial i Economia Pública |
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Abstract:
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This article provides a theoretical and empirical analysis of a firm's optimal R&D strategy choice. In this
paper a firm's R&D strategy is assumed to be endogenous and allowed to depend on both internal firms.
characteristics and external factors. Firms choose between two strategies, either they engage in R&D or
abstain from own R&D and imitate the outcomes of innovators. In the theoretical model this yields three
types of equilibria in which either all firms innovate, some firms innovate and others imitate, or no firm
innovates. Firms'equilibrium strategies crucially depend on external factors. We find that the efficiency of
intellectual property rights protection positively affects firms'incentives to engage in R&D, while competitive
pressure has a negative effect. In addition, smaller firms are found to be more likely to become imitators
when the product is homogeneous and the level of spillovers is high. These results are supported by empirical evidence for German .rms from manufacturing and services sectors.
Regarding social welfare our results indicate that strengthening intellectual property protection can have
an ambiguous effect. In markets characterized by a high rate of innovation a reduction of intellectual
property rights protection can discourage innovative performance substantially. However, a reduction of
patent protection can also increase social welfare because it may induce imitation. This indicates that policy issues such as the optimal length and breadth of patent protection cannot be resolved without taking into account specific market and firm characteristics.
Journal of Economic Literature Classification Numbers: C35, D43, L13, L22, O31.
Keywords: Innovation; imitation; spillovers; product differentiation; market competition; intellectual property
rights protection. |
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Publication date:
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2011 |
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Subject (UDC):
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33 - Economia
65 - Gestió i organització. Administració i direcció d'empreses. Publicitat. Relacions públiques. Mitjans de comunicació de masses |
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Subject(s):
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Empreses -- Innovacions tecnològiques
Diferenciació de productes
Propietat intel·lectual |
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Rights:
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L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons: http://creativecommons.org/licenses/by-nc-nd/3.0/es/ |
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Pages:
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36 p. |
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Document type:
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Working Paper |
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Published by:
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Universitat Rovira i Virgili. Departament d'Economia
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Collection:
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Documents de treball del Departament d'Economia;2011-23
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