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Oxford Economic Papers Advance Access originally published online on August 20, 2004
Oxford Economic Papers 2004 56(4):735-743; doi:10.1093/oep/gpf065
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© Oxford University Press 2004; All rights reserved

Process and product R&D by a multiproduct monopolist

Ping Lin

Department of Economics, Lingnan University, Hong Kong; e-mail: plin{at}ln.edu.hk

It is shown that the claim in Lambertini that a multiproduct monopolist's incentive for process R&D declines with the number of products it offers is incorrect. This incentive is in fact an increasing function of the number of products in his model. I further extend the model of Lambertini to show that whether or not process R&D incentive and the number of varieties are positively related depends on the degree of scope economies in process R&D. Product innovation promotes process R&D if the degree of such scope economies is high (as in Lambertini), and discourages it if the degree of scope economies is low.


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