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Innovation, Competition, and Investment Timing
2012
Social Science Research Network
In our model multiple innovators compete against each other by submitting investment proposals to an investor. The investor chooses the least expensive proposal and when to invest in it. Innovators have to provide costly effort and they learn privately the cost of investing. Innovators' effort costs have to be compensated for, but on the positive side competition helps to erode innovators' informational rents, since innovators are more likely to lose the competition if they inflate investment
doi:10.2139/ssrn.2153713
fatcat:jufcvaz4r5ctpivsxgbuknf44a