## A model of R & D for improvement in process technology |

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### Contents

Myopia in the Management of Research and | 4 |

RD For Incremental Improvements in Process | 42 |

Appendix A | 72 |

2 other sections not shown

### Common terms and phrases

adopt a technological assumption Balcer and Lippman Bell System COMPARATIVE STATICS considered convex function costs of adoption critical value current technology derive dF(y discount factor discounted profit distribution function dynamic programming employs the policy engage in R&D ENPV expected value firm adopts firm decides firm with technology firm's current level firm's process technology firm's profits firm's technology improvements in process improvements in telephone in-house program increasing function incremental improvements inequalities follow investments in R&D Lemma level of technology Mamer manual switching mimics the actions minimum improvement n-i n-i number of periods optimal adoption policy optimal policy optimal R&D policy optimal return function optimal to adopt option to engage program of R&D Proof R&D cost R&D effort R&D for improvements R&D for incremental R&D program random variable returns to investments simple mimicking stationary policy switching cost technological innovation telephone switching technology Theorem Theorem 13 threshold value undertake R&D V(tx