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Author Engel, Christoph ♦ Heidhues, Paul ♦ Hellwig, Martin ♦ Herweg, Fabian ♦ Jansen, Jos ♦ Müller, Daniel ♦ Mylovanov, Tymofiy ♦ Szech, Nora
Source CiteSeerX
Content type Text
File Format PDF
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Subject Keyword Research Specialization ♦ Vice Versa ♦ Peak Entry ♦ Potential Entrant ♦ Poten-tial Entrant ♦ Efficiency Effect ♦ Success Probability ♦ Safe Research ♦ Risky Research ♦ High Probability ♦ Incumbent Special-izes ♦ Replacement Effect ♦ Inverted U-shape ♦ Low Success Probability
Abstract We examine the persistence of monopolies in markets with innovations when the outcome of research is uncertain. We show that for low success probabilities of research, the incumbent can seldom preempt the poten-tial entrant. Then the efficiency effect outweighs the replacement effect. It is vice versa for high probabilities. Moreover, the incumbent special-izes in “safe ” research and the potential entrant in “risky ” research. We also show that the probability of entry is an inverted U-shape in the success probability. Since even at the peak entry is rather unlikely, the persistence of the monopoly is high.
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Publisher Date 2008-01-01