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Absorptive capacity and R&D strategy in mixed duopoly with labor-managed and profit-maximizing firms

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  • Luo, Jianli

Abstract

In a mixed duopoly with a labor-managed firm and a profit-maximizing firm coexisting, this paper explores the effect of technology absorptive capacity on firms' output decision, R&D investment decision and social welfare. Firstly, we develop a two-stage R&D game model on the basis of cost-reducing R&D with spillover and absorptive capacity. Secondly, we explore the strategic interactions of output, R&D investment and social welfare respectively in the mixed duopoly with a labor-managed and a profit-maximizing firms. Finally we analyze the effects of absorptive capacity on output decision, strategic investment decision and social welfare respectively. The research suggests that labor-managed firms employ less workers and produce less outputs while they invest more in R&D than that of profit-maximizing firms. Whether the effect of absorptive capacity increases R&D investment of labor-managed firms or not depends on the returns to scale. However, it bears no relationship to the returns to scale of the profit-maximizing firm.

Suggested Citation

  • Luo, Jianli, 2013. "Absorptive capacity and R&D strategy in mixed duopoly with labor-managed and profit-maximizing firms," Economic Modelling, Elsevier, vol. 31(C), pages 433-439.
    • Handle: RePEc:eee:ecmode:v:31:y:2013:i:c:p:433-439
    DOI: 10.1016/j.econmod.2012.12.009
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    2. Luo, Jian-Li & Hu, Zhen-Hua, 2015. "Risk paradigm and risk evaluation of farmers cooperatives' technology innovation," Economic Modelling, Elsevier, vol. 44(C), pages 80-85.
    3. Ho, Jerry & Hoang, Vincent & Wilson, Clevo, 2020. "Government R&D Subsidies and International Competitiveness of Labor-managed Firms," MPRA Paper 106896, University Library of Munich, Germany, revised 09 Dec 2020.
    4. Kazuhiro Ohnishi, 2019. "Capacity choice in an international mixed triopoly," Working Papers e140, Tokyo Center for Economic Research.
    5. Zhang, Yanfang, 2020. "When should firms choose a risky new technology? An oligopolistic analysis," Economic Modelling, Elsevier, vol. 91(C), pages 687-693.
    6. Saha, Souresh, 2014. "Firm's objective function and product and process R&D," Economic Modelling, Elsevier, vol. 36(C), pages 484-494.
    7. Ohnishi, Kazuhiro, 2019. "Capacity choice in an international mixed triopoly," MPRA Paper 94051, University Library of Munich, Germany.
    8. Kazuhiro Ohnishi, 2022. "Lifetime Employment and Stackelberg Mixed Duopoly Games with a Foreign Labour-Managed Competitor," Arthaniti: Journal of Economic Theory and Practice, , vol. 21(1), pages 27-42, June.
    9. HIGASHIDA Keisaku, 2018. "Subsidies to Public Firms and Competition Modes under a Mixed Duopoly," Discussion papers 18001, Research Institute of Economy, Trade and Industry (RIETI).

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