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Revision with unchanged content. In high-tech industries Research and Development (R&D) is the most im por tant origin of competitive advantage. The underlying investment decisions are no tably complex. First high-tech industries are highly concentrated such that mu tual observation and reactions among competitors need to be taken into account. Secondly the knowledge created through R&D may not only benefit its originator but may spill over to competitors. This book offers novel ana lyses of four questions. Should competitors follow similar research paths as to maximise knowledge flows or, to the contrary, minimize spillovers through spe cific paths? What is the optimal mix of R&D aimed to create original in no va tion and R&D targeted to absorb others innovations? Under what cir cum stan ces can incumbents use their ability to absorb external R&D as to threaten innovative entrants? Should competing firms share knowledge with a common supplier who may diffuse it? Basic game theory is applied and the book addresses researchers, advanced students, policy-makers and R&D stra te gists.

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Dr. Lars Wiethaus, Master in Business Administration, Ph.D. in Economics, University of Hamburg. Scholarships, University of Notre Dame and Max Planck Institute of Economics. Economic Consultant, LECG Ltd., London, Competition Policy Practice. Referee for numerous academic journals.

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