Competition and Innovation: An Experimental Investigation

The paper analyzes the effects of competitive intensity on firms' incentives to invest in process innovations through an experiment based on two-stage games, where R&D investment choices are followed by product market competition. An increase in the intensity of competition is modeled as an increase in the number of Þrms or as a switch from Cournot to Bertrand. The theoretical prediction is that more intense competition is unfavorable to investments for both cases. In the experiment it turns out that the way of modeling the intensity of competition is essential. The theoretical prediction is confirmed for the number effects. On the other hand, the comparison of Cournot and Bertrand shows that more intense competition is beneÞcial for investments.R&D investment, intensity of competition, experiment

All-Pay Auctions with Negative Prize Externalities: Theory and Experimental Evidence

The paper characterizes the mixed-strategy equilibria in all-pay auctions with endogenous prizes that depend positively on own effort and negatively on the effort of competitors. Such auctions arise naturally in the context of investment games, lobbying games, and promotion tournaments. We also provide an experimental analysis of a special case which captures the strategic situation of a two-stage game with investment preceding homogenous Bertrand competition. We obtain overinvestment both relative to the mixed-strategy equilibrium and the social optimum.All-pay auctions, oligopoly, investment, experiment, overbidding

Competition and Innovation: An Experimental Investigation

The paper analyzes the effects of competitive intensity on firms' incentives to invest in process innovations through an experiment based on two-stage games, where R&D investment choices are followed by product market competition. An increase in the intensity of competition is modeled as an increase in the number of Þrms or as a switch from Cournot to Bertrand. The theoretical prediction is that more intense competition is unfavorable to investments for both cases. In the experiment it turns out that the way of modeling the intensity of competition is essential. The theoretical prediction is confirmed for the number effects. On the other hand, the comparison of Cournot and Bertrand shows that more intense competition is beneÞcial for investments

Is there a U-shaped Relation between Competition and Investment?

We argue that, in a simple setting, the relation between the intensity of competition and cost-reducing investment is U-shaped. We consider a two-stage game with cost-reducing investments followed by a linear differentiated Cournot duopoly. We first show that, except for firms that are much less efficient than the competitor, investment in the subgame-perfect equilibrium is minimal for intermediate levels of competition, which is inversely parameterized by the extent of product differentiation. An extensive set of laboratory experiments also provides support for the U-shape, both for symmetric firms and for leaders. Also consistent with predictions, the relation is negative for firms that are lagging behind.Investment, intensity of competition, experiment

Competition and innovation: anexperimental investigation

The paper analyzes the effects of more intense competition on firms' investments in process innovations. More intense competition corresponds to an increase in the number of firms or a switch from Cournot to Bertrand competition. We carry out experiments for two-stage games, where R&D investment choices are followed by product market competition. An increase in the number of firms from two to four reduces investments, whereas a switch from Cournot to Bertrand increases investments, even though theory predicts a negative effect in the four-player case. The results arise both in treatments in which both stages are implemented and in treatments in which only one stage is implemented. However, the positive effect of moving from Cournot to Bertrand competition is more pronounced in the former cas

Regional-scale Predictions of Agricultural N Losses in an Area with a High Livestock Density

The quantification of the N losses in territories characterised by intensive animal stocking is of primary importance. The development of simulation models coupled to a GIS, or of simple environmental indicators, is strategic to suggest the best specific management practices. The aims of this work were: a) to couple a GIS to a simulation model in order to predict N losses; b) to estimate leaching and gaseous N losses from a territory with intensive livestock farming; c) to derive a simplified empirical metamodel from the model output that could be used to rank the relative importance of the variables which influence N losses and to extend the results to homogeneous situations. The work was carried out in a 7773 ha area in the Western Po plain in Italy. This area was chosen because it is characterised by intensive animal husbandry and might soon be included in the nitrate vulnerable zones. The high N load, the shallow water table and the coarse type of sub-soil sediments contribute to the vulnerability to N leaching. A CropSyst simulation model was coupled to a GIS, to account for the soil surface N budget. A linear multiple regression approach was used to describe the influence of a series of independent variables on the N leaching, the N gaseous losses (including volatilisation and denitrification) and on the sum of the two. Despite the fact that the available GIS was very detailed, a great deal of information necessary to run the model was lacking. Further soil measurements concerning soil hydrology, soil nitrate content and water table depth proved very valuable to integrate the data contained in the GIS in order to produce reliable input for the model. The results showed that the soils influence both the quantity and the pathways of the N losses to a great extent. The ratio between the N losses and the N supplied varied between 20 and 38%. The metamodel shows that manure input always played the most important role in determining the N losses. Other important factors in draining soils were mineral fertilisation and potential drainage, which played a minor role in poorly draining soils. The drainage of the soil and the water table depth also played an important role by influencing the soil water content and N losses. The differences among the crops resulted to be very important and it was impossible to produce any indicator to predict N losses for all the crops together. Estimations of total losses are more reliable than estimations of leaching alone. Estimations of total N losses for maize and meadows are more reliable than for winter cereals