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Strategic Considerations in Invention and Innovation: The Case of Natural Resources

Stiglitz, Joseph E.; Dasgupta, Partha; Gilbert, Richard J.

Strategic considerations may induce a resource importing country to invent a substitute earlier than it intends to put it to use. There are also circumstances in which it would wish to delay an invention date even if it could obtain it at an earlier date at no extra cost. Similar paradoxical results obtain if resource cartels behave strategically. Setting prices high may be a way of deterring invention. If those engaged in R and D are not resource users, and the cartel has access to similar R and D technology, it will pre-empt rivals. This may not be the case if resource users can also engage in R and D.

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Econometrica

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Economics
Published Here
April 29, 2013
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