Investment and market dominance

We analyze a model of oligopolistic competition with ongoing investment. Sp ecial cases include incremental investment, parent races, learning by doing , and network externalities, We investigate circumstances under which a fir m with low costs or high quality will extend its initial lead through inves tments, To this end, we derive a new comparative statics result for general games with strategic substitutes, which applies to our investment game. Fi nally, we highlight plausible countervailing effects that arise when invest ments of leaders are less effective than those of laggards, or in dynamic g ames when firms are sufficiently patient.