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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
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    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.

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    Bibliographic Info

    Article provided by Elsevier in its journal Economic Modelling.

    Volume (Year): 31 (2013)
    Issue (Month): C ()
    Pages: 433-439

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    Handle: RePEc:eee:ecmode:v:31:y:2013:i:c:p:433-439

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    Web page: http://www.elsevier.com/locate/inca/30411

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    Keywords: R&D; Strategic interaction; Absorptive capacity; Labor-managed firm; Oligarch competition;

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    1. 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).
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    Cited by:
    1. Hammady Ahmed DINE RABEH, 2013. "Firm Resources’ Entanglement Determines ITS Absorptive Capacity: A Review Towards A New Reconceptualization," Working Papers 270, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.

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