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R&D Competition with Asymmetric Firms

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  • Poyago-Theotoky, Joanna

Abstract

This paper considers a nontournament duopoly model of process innovation. Costs of production can be reduced by firms spending on R&D. Firms are asymmetric in the sense that they may differ in their initial costs of production . It is shown that the high-cost firm may spend more (or less) in R&D than its low-cost rival. This main result is dependent on the relative magnitude of two important forces: the incentive effect, whereby the low-cost firm always has a stronger incentive to spend on cost-reducing R&D, and the effectiveness factor, which favors the high-cost firm. Copyright 1996 by Scottish Economic Society.

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Bibliographic Info

Article provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.

Volume (Year): 43 (1996)
Issue (Month): 3 (August)
Pages: 334-42

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Handle: RePEc:bla:scotjp:v:43:y:1996:i:3:p:334-42

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Cited by:
  1. Gamal Atallah, 2000. "Vertical R&D Spillovers, Cooperation, Market Structure, And Innovation," Industrial Organization, EconWPA 0004009, EconWPA.
  2. Banerjee, Dyuti & Chatterjee, Ishita, 2010. "The impact of piracy on innovation in the presence of technological and market uncertainty," Information Economics and Policy, Elsevier, Elsevier, vol. 22(4), pages 391-397, December.
  3. Nilssen, Tore & Pita Barros, Pedro Luis, 1998. "Industrial Policy and Firm Heterogeneity," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1986, C.E.P.R. Discussion Papers.
  4. Suetens, S., 2004. "Literature review: R&D cooperation in oligopoly with spillovers: An experimental economics approach," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3529827, Tilburg University.
  5. Escrihuela-Villar, Marc, 2004. "Innovation and market concentration with asymmetric firms," CFS Working Paper Series 2004/03, Center for Financial Studies (CFS).
  6. Pedro P. Barros & Tore Nilssen, 1999. "The Effect of Firm Heterogeneity on R&D Competition," Nordic Journal of Political Economy, Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 25, pages 87-93.
  7. Andrew McKay & Oliver Morrissey & Charlotte Vaillant, . "Aggregate Export and Food Crop Supply Response in Tanzania," Discussion Papers 98/4, University of Nottingham, CREDIT.
  8. Joanna Poyago-Theotoky & Khemarat Talerngsri Teerasuwannajak, 2009. "R&D Productivity and Intellectual Property Rights Protection Regimes," Working Paper Series, The Rimini Centre for Economic Analysis 43_09, The Rimini Centre for Economic Analysis, revised Jan 2009.

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