Relationship Between the Probability of Successful Innovation,R&D Costs and Firm Competition
Firms'innovation activities will bring about product value enhancement,but the outcome of innovation is unknown.By introducing a binary distributed probability model of successful innovation and constructing a game model of two symmetric competing firms,we explore firms'competition and innovation decisions.It is found that the level of probability of successful innovation affects the relationship between the level of aggregate supply and the size of aggregate market demand and the degree of firm competition,and that a moderate probability of successful innovation leads to more intense post-innovation competition.In addition,too high R&D costs will discourage firms from innovating,but when both R&D costs and the probability of successful innovation are high,firms are likely to upgrade their product innovations.
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