What is it about?
Associate firm size vis-à-vis industry size with firm level R&D and the resultant impact(s) on industry level output and price. We consider an industry having one dominant firm and some competitive fringes. R&D by the dominant firm is viewed both as a technological breakthrough and as augmenting monetary expenditure. When innovation is considered as technological breakthrough, then for the benevolent industry leader, its scope for output expansion is more when R&D is induced by the industry size vis-à-vis firm size. However, when R&D led innovation is seen as cost augmenting then the industry size induced innovation yields greater output if the firm acts as a Stackelberg leader.
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Why is it important?
Exploiting the industry size renders a higher incentive to innovate for the industry leader in terms of capacity expansion.
Perspectives
We somewhat believe that if firm level innovation induced by the industry size can bring in such expansionary output effect for the dominant incumbent(s) and welfare gain for the consumers then probably future theoretical as well as empirical research will shed more light on these dimensions and many more hopefully.
Ms Richa Shukla
IIT Bomaby
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This page is a summary of: Firm Size vis-à-vis Industry Size and Innovation in a Dominant Firm-fringes Oligopoly Model, Foreign Trade Review, February 2016, SAGE Publications,
DOI: 10.1177/0015732515614436.
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