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Dynamic R&D with spillovers: Competition vs cooperation

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  • Cellini, Roberto
  • Lambertini, Luca

Abstract

We investigate dynamic R&D for process innovation in a Cournot duopoly where firms may either undertake independent ventures or form a cartel for cost-reducing R&D investments. By comparing the profit and welfare performances of the two settings in steady state, we show that private and social incentives towards R&D cooperation coincide for all admissible levels of the technological spillovers characterising innovative activity. We also evaluate the whole history of the dynamic system along the transition to the steady state, showing that the conflict between private and social incentives does not necessarily emerge.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 33 (2009)
Issue (Month): 3 (March)
Pages: 568-582

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Handle: RePEc:eee:dyncon:v:33:y:2009:i:3:p:568-582

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Web page: http://www.elsevier.com/locate/jedc

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Keywords: Differential games Process innovation R&D cooperation Spillovers;

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References

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  1. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, Econometric Society, vol. 52(1), pages 101-21, January.
  2. Rabah Amir & John Wooders, 1999. "Effects of One-Way Spillovers on Market Shares, Industry Price, Welfare, and R & D Cooperation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(2), pages 223-249, 06.
  3. Hinloopen, Jeroen, 2000. "Strategic R&D Co-operatives," Research in Economics, Elsevier, Elsevier, vol. 54(2), pages 153-185, June.
  4. Luca Lambertini & Sougata Poddar & Dan Sasaki, 1997. "RJVs in Product Innovation and Cartel Stability," CIE Discussion Papers, University of Copenhagen. Department of Economics. Centre for Industrial Economics 1997-13, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  5. Kamien, Morton I. & Zang, Israel, 2000. "Meet me halfway: research joint ventures and absorptive capacity," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 18(7), pages 995-1012, October.
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  7. LAMBERTINI, Luca & PODDAR, Sougata & SASAKI, Dan, . "Standardization and the stability of collusion," CORE Discussion Papers RP -1325, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Rabah Amir, 1998. "Modelling Imperfectly Appropriable R&D via Spillovers," CIE Discussion Papers, University of Copenhagen. Department of Economics. Centre for Industrial Economics 1998-07, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  9. Cabral, Luis M. B., 2000. "R&D cooperation and product market competition," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 18(7), pages 1033-1047, October.
  10. James A. Brander & Barbara J. Spencer, 1983. "Strategic Commitment with R&D: The Symmetric Case," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 225-235, Spring.
  11. Kotaro Suzumura, 1990. "Cooperative and Non-cooperative R&D in Oligopoly with Spillovers," Discussion Paper Series, Institute of Economic Research, Hitotsubashi University a218, Institute of Economic Research, Hitotsubashi University.
  12. Katsoulacos, Yannis & Ulph, David, 1998. "Endogenous Spillovers and the Performance of Research Joint Ventures," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 333-57, September.
  13. Qiu, Larry D., 1997. "On the Dynamic Efficiency of Bertrand and Cournot Equilibria," Journal of Economic Theory, Elsevier, vol. 75(1), pages 213-229, July.
  14. Rabah Amir & John Wooders, 1998. "Cooperation vs. competition in R&D: The role of stability of equilibrium," Journal of Economics, Springer, vol. 67(1), pages 63-73, February.
  15. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, Elsevier, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
  16. Joanna Poyago-Theotoky, 1999. "A Note on Endogenous Spillovers in a Non-Tournament R & D Duopoly," Review of Industrial Organization, Springer, vol. 15(3), pages 253-262, November.
  17. d'ASPREMONT, Claude & JACQUEMIN, Alexis, . "Cooperative and noncooperative R&D in duopoly with spillovers," CORE Discussion Papers RP -823, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  18. Luca Lambertini & Francesca Lotti & Enrico Santarelli, 2004. "Infra-industry spillovers and R&D cooperation: Theory and evidence," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(4), pages 311-328.
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Citations

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Cited by:
  1. L. Lambertini & G. Rossini, 2004. "The gains from cooperative R&D with a concave technology and spillovers," Working Papers 508, Dipartimento Scienze Economiche, Universita' di Bologna.
  2. R. Cellini & L. Lambertini, 2004. "R&D Incentives under Bertrand Competition: A Differential Game," Working Papers 519, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. Hasnas, Irina & Lambertini, Luca & Palestini, Arsen, 2014. "Open Innovation in a dynamic Cournot duopoly," Economic Modelling, Elsevier, vol. 36(C), pages 79-87.
  4. Italo Bischi, Gian & Lamantia, Fabio, 2012. "A dynamic model of oligopoly with R&D externalities along networks. Part II," Mathematics and Computers in Simulation (MATCOM), Elsevier, Elsevier, vol. 84(C), pages 66-82.
  5. G. Feichtinger & L. Lambertini & G. Leitmann & S. Wrzaczek, 2014. "R&D for green technologies in a dynamic oligopoly: Schumpeter, Arrow and inverted-U’s," Working Papers wp929, Dipartimento Scienze Economiche, Universita' di Bologna.
  6. Dawid, H. & Kopel, M. & Kort, P.M., 2013. "R&D competition versus R&D cooperation in oligopolistic markets with evolving structure," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 31(5), pages 527-537.
  7. Jeroen Hinloopen & Grega Smrkolj & Florian Wagener, 2013. "In Defense of Trusts: R&D Cooperation in Global Perspective," Tinbergen Institute Discussion Papers 13-045/II, Tinbergen Institute, revised 04 Mar 2014.
  8. Duarte Leite & Pedro Campos & Isabel Mota, 2011. "Computational Results on Membership in R&D Cooperation Networks: To Be or Not To Be in a Research Joint Venture," FEP Working Papers 420, Universidade do Porto, Faculdade de Economia do Porto.
  9. R. Cellini & L. Lambertini, 2004. "R&D Incentives and Market Structure: A Dynamic Analysis," Working Papers 497, Dipartimento Scienze Economiche, Universita' di Bologna.
  10. Jeroen Hinloopen & Grega Smrkolj & Florian Wagener, 2011. "From Mind to Market: A Global, Dynamic Analysis of R&D," Tinbergen Institute Discussion Papers 11-139/1, Tinbergen Institute.
  11. Jannett Highfill & Michael McAsey, 2013. "Welfare Measures in Dynamic Firm R&D Games," International Advances in Economic Research, International Atlantic Economic Society, vol. 19(4), pages 439-449, November.
  12. G. F. Gori & L. Lambertini, 2014. "Trade, externalities, and the impact of asymmetric information on trade policy," Working Papers wp930, Dipartimento Scienze Economiche, Universita' di Bologna.
  13. Jannett Highfill & Michael McAsey, 2013. "Dynamic Firm R&D Games: Manufacturing Costs and Reliability Paths," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 1-14, February.

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