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We present a dynamic duopoly model of technical innovation in which R&D costs decrease exogenously with time and inter-firm knowledge spillover lowers the second comer's R&D cost. The spillover effect only becomes available after a disclosure lag. These features allow us to identify a new type of equilibrium: the leader delays investment until the R&D cost is low enough that the follower finds it optimal to invest as soon as he can benefit from the spillover. This equilibrium is subgame perfect over a wide range of parameters and raises several interesting implications. First, in our new equilibrium, the time delay between the two R&D investments is realistically short. Second, while the presence of a spillover favors the second-mover, this benefit is not enough to rule out a first-mover advantage. Indeed, the first-mover advantage survives whenever technical progress is sufficiently fast and the disclosure lag is relatively long. Third, in case of a major innovation, our equilibrium implies under-investment, which requires a substantial public intervention in favor of the investment activity.

Cover -- Half Title -- Title Page -- Copyright Page -- Table of contents -- Contributors -- 1 Introduction -- Note -- 2 Regional economic theory and the impact of transport investments -- Introduction -- How natural advantage and governance can explain differences in regional economic development -- Explaining differences in regional economic development in the absence of differences in natural advantage and governance -- Imperfect competition due to increasing returns to scale -- Home market effect -- Core-periphery model -- Input-output linkages -- Increasing spatial fragmentation of firms and the role of communication costs -- Long-term developments in the costs of trade and transport -- Empirical assessment of the effects of transport costs on regional development -- Economic impact studies -- Econometric studies on the effects of air transport on economic development -- European regional policy -- Conclusions -- Note -- References -- 3 A review of connectivity utility models and their applications -- Introduction -- A review of the Connectivity Utility Model -- The construction of the direct air connectivity measure -- The construction of indirect air connectivity measure -- The construction of a multi-modal connectivity measure -- Applications of the Connectivity Utility Model -- China's direct air connectivity with other countries/economies -- China's overall connectivity (the sum of direct and indirect connectivity) -- Using the extended ConnUM for vulnerability analysis -- Conclusions -- Notes -- References -- 4 Wider economic benefits: What they are, how they manifest, and an example from network air services -- Introduction -- Literature evolution -- Public capital and economic growth -- Mechanisms of WEB -- Wider economic benefits vs catalytic effects -- Wider economic benefits (WEBs) and aviation.