Innovation timing games

A general framework with applications

authored by

Heidrun C. Hoppe, Ulrich Lehmann-Grube

Abstract

We offer a new algorithm for analyzing innovation timing games. Its main advantage over the traditional approach is that it applies to problems that had previously been intractable. We use the algorithm to examine two classical innovation problems. We find that the competition takes the form of a waiting game with a second-mover advantage either for any level of R&D costs (process innovation) or for high R&D costs (product innovation). Moreover, both models predict that the second-mover advantage is monotonically increasing in the costs of R&D.

External Organisation(s)

University of Bonn
Universität Hamburg

Type

Article

Journal

Journal of economic theory

Volume

121

Pages

30-50

No. of pages

21

ISSN

0022-0531

Publication date

03.2005

Publication status

Published

Peer reviewed

Yes

ASJC Scopus subject areas

Economics and Econometrics

Sustainable Development Goals

SDG 9 - Industry, Innovation, and Infrastructure

Electronic version(s)

https://doi.org/10.1016/j.jet.2004.03.002 (Access: Unknown)