According to the inverted-U theory, R&D expenditures as a percentage of sales tend to be relatively low in
A) low-concentration industries only
B) high-concentration industries only
C) low- and high-concentration industries
D) low- to middle-concentration industries

Question

Quizplus · Accepted Answer

According to the inverted-U theory, R&D expenditures as a percentage of sales tend to be relatively low in both low- and high-concentration industries. In low-concentration industries, there may be little incentive for firms to invest heavily in R&D because there are many potential competitors and any innovation may be quickly imitated. In high-concentration industries, firms may already have significant market power and feel less pressure to innovate to maintain a competitive advantage. Conversely, R&D expenditures tend to be highest in medium-concentration industries, where there is enough competition to create incentives for firms to innovate, but not so much that innovation is quickly imitated.

According to the Inverted-U Theory, R&D Expenditures as a Percentage