Econ 483_Lecture 18_Quality ladders_Competition policy

5g data transfer become grew in importance with the

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Unformatted text preview: uality ladders Competition policy R&D joint ventures 2.5G Data transfer become grew in importance with the release of General Packet Radio Service (GPRS) networks (WAP: wireless application protocol; MMS: multimedia messaging services; internet capability) Lecture 18: R&D joint ventures, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Q uality ladders Competition policy R&D joint ventures 3G 3G networks CDMA2000 used entirely di¤erent radio frequencies; power to capture images & videos, watch TV on the go, Internet access to surf the Web & download music. Lecture 18: R&D joint ventures, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Q uality ladders Competition policy R&D joint ventures 4G iPhone, Android; VoIP calls... Lecture 18: R&D joint ventures, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Q uality ladders Competition policy R&D joint ventures Quality ladder: …rms create successively better products, each improving on the previous one. successive improvement: no innovator is secured in thinking that her innovation will be the last q0 : the quality of the most recent product in the product line q1 : the quality of a new improved version of the old product ∆: the quality di¤erence; the incremental improvement Lecture 18: R&D joint ventures, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Q uality ladders Competition policy R&D joint ventures Quality ladders There is a sequence of products that keep getting better. Every improver will initially be in the position of market incumbent & then will be superseded. The problem is to ensure a large enough ‡ow of pro…t to cover costs and encourage progress. What will create the incentive for …rms to invest in improvements? Lecture 18: R&D joint ventures, Econ483: Econ of Innovation & Technology, Evangelia Chalioti c A ll rights reserved. Q uality ladders Competition policy R&D joint ventures...
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