technical progress impact on competition-investment relationship

What is it about?

Technical progress impacts the relationship between competition and investment. The higher the technical progress the higher the required investment . The required investment (the investment that maximizes profits) may not be achieved if competition is too fierce.

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Why is it important?

This paper shows that the relationship between competition and investment is not monotonic. There is a level of competition that maximizes investment. Technical progress impacts this relationship and tends to decrease the level of competition that maximizes investment. In some way, technical progress acts as a dynamic competition. This is specially important for industries that experience a high level of technical progress like information technologies or biotechnologies.