Document Type
Article
Journal/Book Title/Conference
Economics Bulletin
Volume
35
Issue
1
Publisher
Economics Bulletin
Publication Date
2015
First Page
259
Last Page
269
Abstract
We model non-drastic technological innovation in a duopoly model with differentiated products. We derive profit functions for both firms which depend on only one variable, the technological gap. As our model derives product demands directly from agent utility we are able to fully describe the welfare effects of innovation. We show that the welfare improvements from innovation come not only as firms accrue higher profits, by charging consumers higher prices, but also as consumers enjoy higher quality products.
Recommended Citation
Jackson, Jeremy Jay and Smith, Jason, "A framework for non-drastic innovation with product differentiation" (2015). Economics and Finance Faculty Publications. Paper 915.
https://digitalcommons.usu.edu/econ_facpubs/915
