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Resource Allocation Among Competing Innovators

Many innovative products are designed to satisfy the demand of specific target consumers; thus, the innovators will inevitably compete with each other in the product market. We investigate how a profit-maximizing principal should properly allocate her limited resources to support the innovations of multiple potentially competing innovators. We find that, as the available resources increase, the optimal diversification of investment may first increase and then decrease. This interesting nonmonotone pattern is driven by a trade-off between the risk of innovation failure and rent dissipation because of competition. Using this framework, we also analyze a nonprofit principal seeking to maximize the total number of successful innovations, the probability of at least one innovator succeeding, consumer surplus, and total social welfare. A nonprofit principal tends to invest more diversely compared with a for-profit counterpart.

Ketersediaan

Informasi Detail

Judul Seri

MANAGEMENT SCIENCE; Vol.68 No.8 August 2022

No. Panggil

-

Penerbit

: .,

Deskripsi Fisik

p. 6059-6074

Bahasa

English

ISBN/ISSN

-

Klasifikasi

NONE

Tipe Isi

-

Tipe Media

-

Tipe Pembawa

-

Edisi

-

Subjek

COMPETITION
VENTURE CAPITAL
INNOVATION
RESOURCE ALLOCATION
R&D

Info Detail Spesifik

https://doi.org/10.1287/mnsc.2021.4167

Pernyataan Tanggungjawab

Pin Gao, Xiaoshuai Fan, Yangguang Huang, Ying-Ju Chen

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