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- Title
Competition and Innovation in Product Quality: Theory and Evidence from Eastern Europe and Central Asia.
- Authors
Karaman, Fatma Nur; Lahiri, Sajal
- Abstract
This paper examines how the degree of competition affects incentives to innovate in product quality in a symmetric Cournot oligopolistic model. We model product quality in a quality-ladder framework and find an inverted-U shaped relationship between the number of firms in an industry and R&D efforts in innovation. We test this theoretical prediction using firm-level data for Eastern European and Central Asian countries from the Business Environment and Enterprise Performance Survey and find strong support for it.
- Subjects
PRODUCT quality; ECONOMIC competition; TECHNOLOGICAL innovations; RESEARCH &; development; COMMERCIAL products
- Publication
B.E. Journal of Economic Analysis & Policy, 2014, Vol 14, Issue 3, p979
- ISSN
2194-6108
- Publication type
Article
- DOI
10.1515/bejeap-2012-0013