The finiteness condition of vertical product differentiation models is translated into the taste distribution model first analyzed by Mussa and Rosen. For a utility function linear in quality, the necessary and sufficient condition for finiteness is that the cost function with respect to quality is strictly concave. Furthermore, for these cost functions, in duopoly, higher quality always implies a higher market share at the Nash equilibrium in prices. The n-firm case is briefly discussed, and some implications for marketing strategy of new products are presented.

In this paper we study a one-shot game of R & D between two firms which differ in their incentives to innovate. We analyse this problem when the R & D technology displays smoothly decreasing returns as well as when increasing returns in the form of indivisibilities prevail. In the first case we show that the magnitude of the ratio between the discount rate and the productivity of R & D expenditure may be a critical parameter in ranking firms' probabilities of winning the race. In the second case, we prove that the firm with the higher profit incentive invests in R & D at least as much as the firm with the higher competitive threat. We then apply these results to a homogeneous duopoly under Bertrand or Cournot competition in the product market.

Cet article analyse si les dépenses de recherche et développement (R & D) seront supérieures ou inférieures sous un « research joint venture » (RJV) ou dans un cadre de concurrence en R & D ; et si les firmes préféreront le premier mode d’organisation au second. Si l’imitation d’une invention s’avère difficile, la réponse à la dernière question dépendra de l’importance relative de deux forces opposées : alors que la coopération va renforcer les gains attendus via un « effet de coordination » positif, elle va également intensifier la concurrence rencontrée par l’innovateur sur le marché des produits en facilitant l’accès des firmes concurrentes à la technologie la plus récente. Par contre, lorsque l’imitation est facile, les firmes préféreront toujours un accord de recherche jointe (RJV) à une concurrence en R & D.

The technological stagnation of large bureaucratic organizations in the seventies led to a revival of “Schumpeterian” entrepreneurship. This is explained as a consequence of the search for flexibility induced by an increase of structural uncertainty. The role of credit in promoting technological flexibility is also considered. Its basic function today is seen to consist not so much in a rapid redistribution of productive resources, as Schumpeter maintained, but rather in a proper reallocation of technological risk.