Innovation, Market Structure and the Holdup Problem : Investment Incentives and Coordination

By Wickelgren, Abraham L.

Book Id: WPLBN0000142287
Format Type: PDF eBook:
File Size: 0.2 MB
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Title:	Innovation, Market Structure and the Holdup Problem : Investment Incentives and Coordination
Author:	Wickelgren, Abraham L.
Volume:
Language:	English
Subject:	Trade, Import and export controls, Federal Trade Commission (U.S.)
Collections:	Economics Publications Collection, Federal Trade Commission
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Publisher:	Government Printing Office


Citation APA MLA Chicago L. Wickelgre, B. A. (n.d.). Innovation, Market Structure and the Holdup Problem : Investment Incentives and Coordination. Retrieved from http://gutenberg.cc/

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Government Reference Publication

Excerpt
Abstract: I analyze the innovation incentives under monopoly and duopoly provision of horizontally differentiated products purchased via bilateral negotiations, integrating the market structure and innovation literature with the holdup literature. I show that competition can improve local incentives for non-contractible investment. Because innovation levels are generally strategic substitutes, however, there can be multiple duopoly equilibria. In some circumstances, monopoly can provide a coordination device that can lead to greater expected welfare despite inferior local innovation incentives. The conditions for this to be the case, however, are quite restrictive.