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Loury (1979) - Market Structure And Innovation (view source)
Revision as of 01:34, 17 November 2010
, 01:34, 17 November 2010→Basic Setup and Assumptions
*There are <math>n\;</math> identical firms, indexed by <math>i\;</math>
*Each firm invests <math>x_i\;</math> to buy a random variable <math>\tau(x_i)\;</math> which gives a completion date
*The firms firm with the earliest realised completion date wins <math>V\;</math>
*<math>\tau \sim F_{\tau}(h(x_i))\;</math> where <math>F_{\tau}\;</math> is the CDF for the exponential distribution: <math>F_{\tau}(h(x_i)) = 1 - e^{-h(x_i)t}\;</math>
*<math>h(x_i)\;</math> is the rate parameter, or the instantaneous probability of the innovation occuring.
