Competition and Innovation Strategies of Firms in High-tech Clusters

This paper first introduces pricing rules for firms with market power in Cournot oligopoly, then analyzes the innovation strategies of firms in high-tech clusters. Firms can choose different innovation strategies such as independent innovation, imitative innovation, and cooperative innovation. Which strategy to be selected relies on the comparison of related revenues and costs. Game theory analysis proves that firms are more likely to cooperate in research and development activity. Clusters provide well-established institution structure to reduce transaction cost and information cost. Cooperation in innovation activities is path-dependent.