6533b827fe1ef96bd1285a5e
RESEARCH PRODUCT
BASIC RESEARCH AND DEVELOPMENT IN VERTICAL MARKETS*
Miguel González-maestreLuis Granerosubject
Competition (economics)MicroeconomicsEconomics and EconometricsPublic investmentDevelopment (topology)Basic researchCredibilityEconomicsInvestment (macroeconomics)description
This paper considers the role of basic research and development (R&D) investment in vertical markets in which an incumbent owner of a basic technological input faces potential competition. We identify the conditions under which the socially optimal investment in basic research involves entry by new firms. Our main insight is that there is a role for public investment in R&D that appears to have been overlooked in the existing literature. This role draws on the idea that basic R&D adds to the credibility of the threat of the potential development of alternative technologies by reducing their implementation costs.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2012-06-19 | The Manchester School |