Agricultural Economics Department


Date of this Version

July 2005


Published in Cornhusker Economics, 07/20/2005. Produced by the Cooperative Extension, Institute of Agriculture and Natural Resources, Department of Agricultural Economics, University of Nebraska–Lincoln.


Innovation activity is a critical element of business conduct affecting the competitiveness of firms, the arrival rate of innovations in the economy, productivity growth and social welfare. The strategic interactions among firms and their effect on innovation have received considerable attention in the economic literature with the main focus being on innovation competition in a pure oligopoly – i.e., a market in which a small number of profit-maximizing, investorowned firms (IOFs) operate.