Section 5 introduces the possibility of nondrastic innovations. Section 6 generalizes the model by allowing research firms to choose the size of innovations as well as their arrival rate. Section 7 deals with a strategic monopsony effect that has been ignored until this point in
the argument, by which an intermediate firm can extend the expected lifetime of
its monopoly by hiring more than the short-run profit-maximizing amount of
skilled labor, at the cost of a higher real wage. Section 8 relaxes the assumption
of a single economy-wide monopoly in the production of intermediate goods.
Section 9 contains brief concluding remark