Technological leadership and persistence of monopoly under endogenous entry: static versus dynamic analysis

0343623 - NHÚ 2011 RIV NL eng J - Journal Article
Kováč, Eugen - Vinogradov, Viatcheslav - Žigić, K.
Technological leadership and persistence of monopoly under endogenous entry: static versus dynamic analysis.
Journal of Economic Dynamics & Control. Roč. 34, č. 8 (2010), s. 1421-1441. ISSN 0165-1889. E-ISSN 1879-1743
Institutional research plan: CEZ:AV0Z70850503
Keywords : dynamic oligopoly * persistence of monopoly * strategic predation
Subject RIV: AH - Economics
Impact factor: 1.117, year: 2010

We build a dynamic oligopoly model with endogenous entry in which a particular firm (leader) invests in an innovation process, facing the subsequent entry of other firms (followers). We identify conditions that make it optimal for the leader in the initial oligopoly situation to undertake pre-emptive R&D investment (strategic predation) eventually resulting in the elimination of all followers. Compared to a static model, the dynamic one provides new insights into the leader's intertemporal investment choice, its optimal decision making, and the dynamics of the market structure over time. We also contrast the leader's investment decisions with those of the social planner.
Permanent Link: http://hdl.handle.net/11104/0186061