Fatma Nur KaramanSajal Lahiri2025-10-0620141935-16822194-610810.1515/bejeap-2012-0013http://dx.doi.org/10.1515/bejeap-2012-0013https://gcris.yasar.edu.tr/handle/123456789/7009This paper examines how the degree of competition affects incentives to innovate in product quality in a symmetric Cournot oligopolistic model. We model product quality in a quality-ladder framework and find an inverted-U shaped relationship between the number of firms in an industry and R&D efforts in innovation. We test this theoretical prediction using firm-level data for Eastern European and Central Asian countries from the Business Environment and Enterprise Performance Survey and find strong support for it.Englishproduct quality, R&D, competition, EECAArticle