Abstract
We analyze innovative activity in a general framework with time-dependent rewards and sunk costs. When firms are identical, innovation is delayed by an increase in the number of firms or a decrease in the size of the reward. When one firm has higher profit potential, it is more likely to innovate first. Our framework generalizes an all-pay auction; however, we show that under certain conditions there is qualitatively different equilibrium behavior.
| Original language | English |
|---|---|
| Pages (from-to) | 1111-1133 |
| Number of pages | 23 |
| Journal | International Journal of Industrial Organization |
| Volume | 21 |
| Issue number | 8 |
| DOIs | |
| State | Published - 1 Jan 2003 |
Keywords
- All-pay auctions
- Innovation
- R&D
- Races
- Sunk costs
ASJC Scopus subject areas
- Industrial relations
- Aerospace Engineering
- Economics and Econometrics
- Economics, Econometrics and Finance (miscellaneous)
- Strategy and Management
- Industrial and Manufacturing Engineering
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