Day: August 9, 2012

 
    Does R&D incentive depend on market system? Is a highly competitive industry with thousands of small firms better suited for technological advantage than an industry that is made up of three or four large firms? Or is there another better suited market system?

Market Systems and Technological advance
Let’s describe short-comings and strengths of all four market systems as related to technological advance.
   Pure Competition
   Is there a strong incentive for a pure competitor to initiate R&D researches? A positive factor is that strong competition provides a reason for them to innovate. If a pure competitor doesn’t introduce a new-product or cost-reducing production process, then one or more of his rivals that could drive the firm away from the market. As a matter of short-run profit and long-run survival, a pure competitor is under continual pressure to improve the product and process of production, and to…