R & D, Innovation and Industrial Structure

The common topic of this collection of studies is the interaction between innova tive activity of firms and industrial structure. I call this interaction technological competition. Firms invest into R&D in order to open up new or enlarge existing profit opportuni ties for the future. A successful R&D-project leads to an innovation. An innovation introduced into the market changes the competitive structure of the industry. At the same time the structure of the industry shapes the incentives to invest into R&D. What matters for these incentives is not so much the existing structure but the expected dynamic evolution of that industry which is again dependent on the innovative choice of firms. Amongst other things, the dynamic of industry evolution is therefore rooted in the dynamics of ongoing innovative activity. Of course, this is not always the whole sto ry. There are (more or less) exogenous factors, like knowledge spillovers from other sectors of the economy, technological breakthroughs in basic research that directly influence the state of competition in an industry by providing additional profit op portunities, etc. The same is true for exogenous changes in upstream markets or demand conditions. My main interest here is not primarily to understand these exogenous forces, but to develop a theory of how the process of firms' innovative activity is shaped by competition and in turn shapes future competition between firms in an industry.

Inhaltsangabe1 Introduction.- 2 A Review of the Literature on Technological Competition.- 2.1 Introduction.- 2.2 One-Shot Technological Competition.- 2.2.1 The Model with Perfect Patent Protection.- 2.2.2 Endogenous Technology Choice.- 2.2.3 Post-Innovation Competition.- 2.2.4 Discussion.- 2.3 Dynamic and Multi-Stage Technological Competition.- 2.3.1 A Sequence of Drastic Innovations.- 2.3.2 Evolution of Oligopoly with Incremental Innovations.- 2.3.3 Multi-Stage Research.- 2.3.4 Discussion.- 2.4 Sequential Entry and Technology Choice from a Given Set.- 3 Sequential Innovative Entry and Endogenous Technology Choice.- 3.1 Introduction.- 3.2 Endogenous Technology Choice and Sequential Entry.- 3.2.1 Entry Decision of the Second Firm.- 3.2.2 The First-Entry Game.- 3.3 Comparative Statics.- 3.3.1 First-Mover Advantages: The Case of Strategic Complements.- 3.3.2 Second-Mover Advantages: The Case of Strategic Substitutes.- 3.3.3 Multiple Equilibria.- 3.3.4 Spillover Effects and Technology Choice.- 3.4 The Endogeneity of Competitive Structure: Mixed Games.- 3.5 Summary and Conclusion.- 4 Strategic Use of Delay and Secrecy for Rent Protection in Technological Competition.- 4.1 Introduction.- 4.2 Revelation of Information and Delay.- 4.3 Strategic Delay if the Research Technology is Random.- 4.3.1 The Investment Decision of a Single Firm.- 4.3.2 Information Revelation and Technological Competition.- 4.3.3 Equilibrium Analysis.- 4.4 Comparative Statics.- 4.5 Summary and Conclusion.- 5 Innovation under Financial Constraints.- 5.1 Introduction.- 5.2 Financial Constraints in Optimal Contracts.- 5.3 A Two-Period Model of Innovation and Competition.- 5.3.1 The Model.- 5.3.2 Equilibrium Analysis without Financial Constraints.- 5.4 Financial Constraints, Competition and Predation.- 5.4.1 The Optimal Incentive Contract.- 5.4.2 Competition and Equilibrium Prédation.- 5.4.3 An Example.- 5.4.4 Precommitment through Observable Contracts.- 5.5 Summary and Conclusion.- 6 Summary and Conclusions.- A.1 Proof of Theorem 3.1.- A.2 Proof of Theorem 3.2.- A.3 Proof of Proposition 3.10.- A.4 Proof of Theorem 4.2.- A.5 Proof of Theorem 4.3.- A.6 Proof of Theorem 5.1.- References.