A welfare analysis of innovation in R and D markets

M. Justman, A. Mehrez

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


This paper analyses the economic efficiency of innovation under different market conditions within the context of a formal model that represents competitive innovation as the closed loop solution of a dynamic stochastic game in the spirit of Reinganum's analysis. It goes beyond Reingnaum's model in its explicit treatment of the product market (following Spence), which permits a consistent analysis of competitive innovation in the absence of patent protection. Efficiency is measured by the expected net present value of total surplus, and studies the effect on it of competitive structure, elasticity of demand, fixed costs, spillovers and subsidies.

Original languageEnglish
Pages (from-to)52-65
Number of pages14
JournalInternational Journal of Social Economics
Issue number2
StatePublished - 1 Jan 1996

ASJC Scopus subject areas

  • Economics and Econometrics
  • General Social Sciences


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