Resource Allocation Among Competing Innovators
研究利润最大化的主体如何将有限资源分配给多个可能相互竞争的创新者，发现最优投资分散度随资源增加先升后降，并对比了非营利主体的不同策略。
Many innovative products are designed to satisfy the demand of specific target consumers; thus, the innovators will inevitably compete with each other in the product market. We investigate how a profit-maximizing principal should properly allocate her limited resources to support the innovations of multiple potentially competing innovators. We find that, as the available resources increase, the optimal diversification of investment may first increase and then decrease. This interesting nonmonotone pattern is driven by a trade-off between the risk of innovation failure and rent dissipation because of competition. Using this framework, we also analyze a nonprofit principal seeking to maximize the total number of successful innovations, the probability of at least one innovator succeeding, consumer surplus, and total social welfare. A nonprofit principal tends to invest more diversely compared with a for-profit counterpart. This paper was accepted by Sridhar Tayur, entrepreneurship and innovation.