Firm size, rivalry and the extent of the market in endogenous technological change

Published

Journal Article

Evidence shows that firms build their market position by accumulating knowledge protected by secrecy, patents and other appropriation devices. I explore the implications of this fact in a model economy where oligopolistic firms establish in-house R and D programs. In symmetric equilibrium, the number of firms determines concentration and firm size. These determine the scale and the efficiency of R and D operations and the rate of innovation. The number of firms, moreover, is endogenous and determined jointly with the rate of growth by the zero-profit condition. This property yields new results. For example, the scale effect of population size may be negative. The market allocation of resources is not Pareto optimal. I discuss the nature of this distortion.

Full Text

Duke Authors

Cited Authors

  • Peretto, PF

Published Date

  • October 1, 1999

Published In

Volume / Issue

  • 43 / 9

Start / End Page

  • 1747 - 1773

International Standard Serial Number (ISSN)

  • 0014-2921

Digital Object Identifier (DOI)

  • 10.1016/S0014-2921(98)00038-5

Citation Source

  • Scopus