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Rivals' Search for Buried Treasure: Competition and Duplication in R&D

Author

Listed:
  • Kaylan Chatterjee

    (The Pennsylvania State University)

  • Robert Evans

    (St. John's College)

Abstract

We analyze an R&D race in which, in each period, two firms each choose which of two research projects to invest in. Each observes the other's past choices and so strategic search is possible. Equilibrium is efficient if the projects differ only in their probability of being the "right'' project. If they differ in other dimensions (e.g., cost), then there may be too much or too little duplication relative to the social optimum.

Suggested Citation

  • Kaylan Chatterjee & Robert Evans, 2004. "Rivals' Search for Buried Treasure: Competition and Duplication in R&D," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 160-183, Spring.
    • Handle: RePEc:rje:randje:v:35:y:2004:1:p:160-183
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    Citations

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    Cited by:

    1. Bavly, Gilad & Heller, Yuval & Schreiber, Amnon, 2022. "Social welfare in search games with asymmetric information," Journal of Economic Theory, Elsevier, vol. 202(C).
    2. Stefano Comino & Fabio M. Manenti, 2022. "Patent portfolios and firms’ technological choices," Journal of Economics, Springer, vol. 137(2), pages 97-120, October.
    3. Ufuk Akcigit & Qingmin Liu, 2011. "The Role of Information in Competitive Experimentation," Levine's Working Paper Archive 786969000000000321, David K. Levine.
    4. Song, Yangbo & Zhao, Mofei, 2021. "Dynamic R&D competition under uncertainty and strategic disclosure," Journal of Economic Behavior & Organization, Elsevier, vol. 181(C), pages 169-210.
    5. Färnstrand Damsgaard, Erika, 2009. "Patent Scope and Technology Choice," Working Paper Series 792, Research Institute of Industrial Economics.
    6. Kaustav Das, 2014. "Strategic Experimentation with Competition and Private Arrival of Information," Discussion Papers 1404, University of Exeter, Department of Economics.
    7. Matros, Alexander & Ponomareva, Natalia & Smirnov, Vladimir & Wait, Andrew, 2019. "Search without observability," Working Papers 2019-04, University of Sydney, School of Economics.
    8. Igor Letina, 2016. "The road not taken: competition and the R&D portfolio," RAND Journal of Economics, RAND Corporation, vol. 47(2), pages 433-460, May.
    9. Nicolas Klein & Sven Rady, 2011. "Negatively Correlated Bandits," Review of Economic Studies, Oxford University Press, vol. 78(2), pages 693-732.
    10. Matros, Alexander & Smirnov, Vladimir, 2011. "Treasure game," Working Papers 2011-10, University of Sydney, School of Economics, revised May 2014.
    11. de Roos, Nicolas & Matros, Alexander & Smirnov, Vladimir & Wait, Andrew, 2018. "Shipwrecks and treasure hunters," Journal of Economic Dynamics and Control, Elsevier, vol. 90(C), pages 259-283.
    12. Bryan, Kevin A. & Lemus, Jorge, 2017. "The direction of innovation," Journal of Economic Theory, Elsevier, vol. 172(C), pages 247-272.
    13. Matros, Alexander & Smirnov, Vladimir, 2016. "Duplicative search," Games and Economic Behavior, Elsevier, vol. 99(C), pages 1-22.
    14. Klein, Nicolas, 2013. "Strategic learning in teams," Games and Economic Behavior, Elsevier, vol. 82(C), pages 636-657.
    15. Nicolas Klein, 2009. "Free-Riding And Delegation In Research Teams," 2009 Meeting Papers 253, Society for Economic Dynamics.
    16. Kaustav Das & Nicolas Klein, 2020. "Do Stronger Patents Lead to Faster Innovation? The Effect of Duplicative Search," Discussion Papers in Economics 20/03, Division of Economics, School of Business, University of Leicester.
    17. Thomas Greve & Hans Keiding, 2023. "A model of privately funded public research," Journal of Economics, Springer, vol. 140(1), pages 63-91, September.
    18. Konrad, Kai A., 2014. "Search duplication in research and design spaces — Exploring the role of local competition," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 222-228.
    19. Kaustav Das, 2013. "Strategic Experimentation with Heterogeneous Agents and Payoff Externalities," Discussion Papers 1315, University of Exeter, Department of Economics.
    20. Shalem, Roy & Trajtenberg, Manuel, 2009. "The Market for R&D Failures," Foerder Institute for Economic Research Working Papers 275729, Tel-Aviv University > Foerder Institute for Economic Research.
    21. Matros, Alexander & Ponomareva, Natalia & Smirnov, Vladimir & Wait, Andrew, 2022. "Search without looking," Journal of Economic Dynamics and Control, Elsevier, vol. 139(C).
    22. Denicolò, Vincenzo & Zanchettin, Piercarlo, 2022. "Patent protection for complex technologies," International Journal of Industrial Organization, Elsevier, vol. 81(C).

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