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Nicolas LAMBERT (MIT/USC) – “Innovation and Competition on a Rugged Technological Landscape (joint work with Steven Callander and Niko Matouschek)”
Séminaire Microéconomie : Tous les mercredis
Heure : 12h15 – 13h30
Date : 17/05/2023
Salle : 3001
Nicolas LAMBERT (MIT/USC) – “ Innovation and Competition on a Rugged Technological Landscape (joint work with Steven Callander and Niko Matouschek) ”
CV : We develop a model of spatial competition in which the quality of a product is learned only after it is introduced to the market. Firms enter sequentially, choosing whether to innovate beyond the frontier and outside the scope of the existing market, or to nestle in a niche between existing products. The uncertainty about a new product’s quality depends on this choice and increases in the degree of horizontal differentiation from existing products. Innovation in this market is irregular with frequent changes of direction and cycles between frontier and niche innovation. We show how the ruggedness of the technological landscape itself deters innovation, generating less product differentiation, narrower markets, less entry and more intense competition than in a world of certainty. We develop and explore numerically a targeted policy intervention that encourages innovation when it ends prematurely. The interventions are short in duration but can restart self-sustaining innovation, generating large returns in welfare.
Julien COMBE (Pôle d’Economie du CREST)
Yves Le YAOUNQ (Pôle d’Economie du CREST)
Matias NUNEZ (Pôle d’Economie du CREST)