The long run dynamics of heterogeneous product and process innovations for a multi product monopolist

Bondarev, Anton A. (2012): The long run dynamics of heterogeneous product and process innovations for a multi product monopolist. Published in: Journal of Economics of Innovation and Technology , Vol. 21, No. 8 (December 2012): pp. 775-799.

Abstract

This paper introduces the dynamical framework which combines product and process innovations. The model contributes to the theoretical literature on innovations in two ways. First, it permits for the simultaneous dynamics of both types of innovations which is rarely considered in the literature. Second, the products being generated by the innovations are heterogeneous in their investment characteristics. This allows for the formation of the dynamic interdependency between both types of innovations. As a result the steady state levels of process innovations for each product are different and influence the dynamics of product innovations in turn.

• Item Type: MPRA Paper
• Language: English
• Keywords: Product Innovations; Process Innovations; Dynamics; Multiproduct; Heterogeneous; Duopoly
• Subjects: L - Industrial Organization > L0 - General; C - Mathematical and Quantitative Methods > C0 - General > C02 - Mathematical Methods; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives

References

Albernathy, W. and J. Utterback (1978, June/July). Patterns of industrial innovation. Technology Review 80 (7), 40-47.

Albernathy, W. and J. Utterback (1985, January). Mapping the winds of creative destruction. Research Policy 14 (1).

Athey, S. and A. Schmutzler (1995). Product and process flexibility in an innovative environment. The RAND Journal of Economics 26 (4),557-574.

Boone, J. (2000). Competitive pressure: The effects on investments in product and process innovation. The RAND Journal of Economics 31 (3), 549-569.

Bouccecine, R., M. Germain, O. Licandro, and A. Magnus (1998, December). Creative destruction, investment volatility, and the average age of capital. Journal of Economic Growth (3), 361-384.

Chryssochoidis, G. (2003). Factors affecting product innovations: A literature review. Agricultural Economics Review (4), 47-62.

Crafts, N. (2010). Cliometrics and technology change: A survey. The European Journal of the History of Economic Thought 17 (5), 1127-1147.

Dixit, A. and J. Stigliz (1977, June). Monopolistic competition and optimum product diversity. American Economic Review 67 (3), 297-308.

Dockner, E., S. Jorgensen, N. Long, and G. Sorger (2000). Differential Games in Economics and Management Sciences. Cambridge University Press,/Cambridge.

Fabbri, G. and F. Gozzi (2008, February). Vintage capital in the ak growth model: a dynamic programming approach. extended version. MRPA paper 7334, University Library of Munich.

Fabbri, G. and M. Iacopetta (2002). Dynamic programming, maximum principle and vintage capital. MRPA paper 5115, University Library of Munich.

Faria, P. and F. Lima (2009, June). Firm decision on innovation types: Evidence on product, process and organizational innovation. conference paper, DRUID Society Summer Conference 2009 on Innovation, Strategy and Knowledge.

Fattorini, H. (1999). Innite Dimensional Optimization and Control Theory. Cambridge University Press/Cambridge.

Gilbert, R. and C. Shapiro (1990, Spring). Optimal patent length and breadth. The RAND Journal of Economics 21 (1), 106-112.

Grossman, G. M. and E. Helpman (1993, November). Endogenous innovation in the theory of growth. working paper 4527, National Bureau of Economic Research.

Hopenhayn, H. and M. Mitchell (2001). Innovation variety and patent breadth. The RAND Journal of Economics 32 (3), 152-166.

Kraft, K. (1990). Are product and process innovations independent from each other? Applied Economics 22 (8), 1029-1038.

Lambertini, L. (2003). The monopolist optimal r&d portfolio. Oxford Economic Papers working paper(55), 561-578.

Lambertini, L. (2009). Optimal product proliferation in a monopoly: A dynamic analysis. Review of Economic Analysis (1), 28-46.

Lambertini, L. and R. Orsini (2001, April). Network externalities and the overprovision of quality by a monopolist. Southern Economic Journal 67 (2), 969-982.

Lin, P. (2004). Process and product r&d by a multiproduct monopolist. Oxford Economic Papers (56), 735-743.

Ram, J., B. Cui, and M. Wu (2010). The conceptual dimensions of innovation: A literature review. conference paper, International Conference on Business and Information, Sapporo, Japan.

Salo, J., H. Karjaluoto, and H. Jussila (2007). New product innovations process: A case study from the metal manufacturing industry. conference paper, 14th International Product Development Management Conference, Porto, Portugal.

Schumpeter, J. (1942). Capitalism, Socialism and Democracy. Harper & Row, New York.