The theory that R&D expenditures as a percentage of firms' sales first rise, reach a peak, and then fall with increases in industry concentration is called the inverted-U theory of R&D.

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The inverted-U theory of R&D suggests that R&D intensity initially increases with industry concentration, peaks, and then decreases, forming an inverted U-shape relationship.

The Theory That R&D Expenditures as a Percentage of Firms