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Sequencing R&D decisions in a two-period duopoly with spillovers

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  • Jim Jin

    ()
    (Department of Economics, The Queen's University of Belfast, Belfast, BT7 1NN, Northern Ireland, UK)

  • Rabah Amir

    ()
    (Department of Economics, University of Southern Denmark, 5230 Odense M, DENMARK)

  • Madjid Amir

    (Department of Statistics and Operations Research, King Saud University, P.O.Box 2455, Riyadh 11451, SAUDI ARABIA)

Abstract

We compare simultaneous versus sequential moves in R&D decisions within an asymmetric R&D/Cournot model with linear demand (for differentiated products), general R&D costs, and spillovers. Simultaneous play and sequential play (with and without a specified leader) can emerge as appropriate formulations, depending on the ratios of spillover rate over demand cross-slope, but not on R&D efficiency. When at least one ratio is above 1/2, a sequential solution mitigates competition and leads to higher profits for each firm, and to higher social welfare. When uniquely specified, the stronger firm emerges as the R&D first-mover.

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 15 (2000)
Issue (Month): 2 ()
Pages: 297-317

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Handle: RePEc:spr:joecth:v:15:y:2000:i:2:p:297-317

Note: Received: December 8, 1997; revised version: October 25, 1998
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Related research

Keywords: R&D spillovers; Cournot duopoly; Subgame-perfect Equilibrium; Endogenous timing.;

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Cited by:
  1. Tobias Kretschmer & Katrin Muehlfeld, 2006. "Co-opetition and prelaunch in standard-setting for developing technologies," LSE Research Online Documents on Economics 19843, London School of Economics and Political Science, LSE Library.
  2. Marco Marini & Giorgio Rodano, 2012. "Sequential vs Collusive Payoffs in Symmetric Duopoly Games," DIAG Technical Reports 2012-06, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
  3. 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.
  4. Marco Marini & Giorgio Rodano, 2011. "Lead, Follow or Cooperate? Endogenous Timing & Cooperation in Symmetric Duopoly Games," Working Papers 1112, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
  5. TESORIERE, Antonio, 2005. "Endogenous R&D symmetry in linear duopoly with one-way spillovers," CORE Discussion Papers 2005045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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