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We are interested in a two-sided platform, in which dynamic innovation plays a role in stimulating consumer demand that also drives firms' incentive to innovate. By explicitly modeling the price competition within the two-sided market, we study ways consumers' platform fee interacts with firms' pricing strategies on the platform. Our framework also characterizes a dynamic R&D race and solves...
We investigate the innovation rate under the impact of business cycles to understand R&D activities and to derive implications for public policies. Combining price competition and endogenous market structure with the framework of dynamic game, we study the Markov perfect equilibrium where heterogeneous firms choose whether to participate in the innovation race and the innovation rate. Based on...
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