Within a principal-agent model, the paper studies how hidden information affects incentives to invest in demand-enhancing R&D of a firm competing in the product market. The analysis shows that, when the R&D outcome is private information of the innovating firm not only compared to its competitor, but also relative to its supplier, a contractual cost arises which neutralizes the standard strategic benefit of R&D and reduces the incentives to invest. Moreover, within this setting, more intense competition always stifles innovation.

中文翻译：

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隐藏信息下的研发激励与竞争压力

在委托代理模型中，本文研究了隐藏信息如何影响在产品市场上竞争的公司对增加需求的研发进行投资的激励。分析表明，当研发成果是创新公司的私人信息时，不仅与竞争对手相比，而且与供应商相比，合同成本会抵消研发的标准战略收益并降低投资激励。此外，在这种情况下，更激烈的竞争总是会扼杀创新。