Competing or Colluding in a Stochastic Environment
AbstractThis document analyses collusion by innovative firms and the role of patents in a continuous-time real options framework. A patent-investment race model is formulated in which innovative firms bargain and reach collusive agreements. It is shown that, while collusion always delays innovation, it does not necessarily delay competition. Depending on a number of factors, collusion can actually accelerate competition.
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Bibliographic InfoPaper provided by Banco de México in its series Working Papers with number 2005-04.
Date of creation: Jul 2005
Date of revision:
Bargaining; Collusion; Competition; Geometric Brownian motion; Nash axiomatic approach; Stackelberg game;
Find related papers by JEL classification:
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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