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A Schumpeterian theory of multi-quality firms

De Hélène Latzer (Journal of Economic Theory, 2018)

Hélène Latzer. "A Schumpeterian theory of multi-quality firms", Journal of Economic Theory, 175 (2018), pp.766-802.

 

Résumé :

"This paper introduces multi-quality firms within a Schumpeterian framework. Featuring non-homothetic preferences and income disparities in an otherwise standard quality-ladder model, it shows that the resulting differences in the willingness to pay for quality among consumers generate both positive investments in R&D by industry leaders and positive market shares for more than one quality, hence allowing for the emergence of multi-product firms within a vertical innovation framework.

This positive investment in R&D by incumbents is obtained with complete equal treatment in the R&D field between the incumbent patent holder and the challengers: in this framework, the incentive for a leader to invest in R&D stems from a “surplus appropriation effect” specific to vertically-differentiated markets, i.e. the perspective of more efficient price discrimination when expanding the product portfolio.

Such a framework makes it possible to analyse the impact of income distribution, as well as that of several possible R&D policies, both on long-term growth and on the allocation of R&D activities between challengers and incumbents."

Codes JEL : O3 ; O4 ; F4.

O - Economic Development, Innovation, Technological Change, and Growth/O.O3 - Innovation • Research and Development • Technological Change • Intellectual Property Rights

O - Economic Development, Innovation, Technological Change, and Growth/O.O4 - Economic Growth and Aggregate Productivity

F - International Economics/F.F4 - Macroeconomic Aspects of International Trade and Finance

DOI 10.1016/j.jet.2018.03.005
 
Dépôt sur HAL
: hal-01387265