Rivalry in Oligopolies Can Lead to Underinvestment in Innovation.
The article explores how companies in a competitive market invest in research and development (R&D) to create innovative products. The researchers created a game where firms compete to be the first to develop a new cost-saving technology. They found that the motivation to innovate depends on the number of companies in the market. Surprisingly, more competition can sometimes lead to less R&D spending. This can result in companies not investing enough in innovation, which could impact overall societal benefits. The study also highlights the different factors that influence R&D investment decisions compared to previous research.