The inverted-U theory of R&D suggests that more R&D spending will be done by oligopolists than by firms producing in the other market structures.

Question

Quizplus · Accepted Answer

The inverted-U theory suggests that firms in oligopolistic markets, due to their market power and resources, are more likely to invest in R&D compared to firms in more competitive or monopolistic markets, as they seek to innovate to gain a competitive edge or maintain their market position.

The Inverted-U Theory of R&D Suggests That More R&D Spending