Low-cost firms may profit from helping high-cost competitors in market competition.
The article explores how competition in the market affects research and development (R&D) efforts and profits of companies in an uneven playing field. It shows that when there are more high-cost firms, low-cost firms invest more in R&D, while high-cost firms invest less. Surprisingly, this can lead to increased profits for low-cost firms, even with more competition. This suggests that low-cost firms may benefit from helping their high-cost competitors, rather than trying to harm them. This finding is linked to a historical practice of sharing knowledge openly, like Ford did in the early 1900s.