Publication details

A Decision-Theoretical Model of Competition and Innovation

Authors

KRČÁL Ondřej

Year of publication 2009
Type Article in Proceedings
MU Faculty or unit

Faculty of Economics and Administration

Citation
Web http://www.univie.ac.at/RNIC/papers/Krcal_rnicconference09.pdf
Keywords Innovation; Competition; Prospect Theory; Inverted-U Relationship
Description In this paper, we show that competition influences innovation decisions of otherwise identical firms. Using prospect theoretical model of decision under uncertainty, we build two basic models that predict an inverted-U relationship between competition and innovation activity frequently observed in empirical studies. We also show that some combinations of the basic models are consistent with the inverted-U hypothesis.

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