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Asymmetric Races of Research and Development

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  • F. Delbono
  • V. Denicolo'

Abstract

In this paper we study a one-shot game of R&D between two price-setting firms that are asymmetrically placed as they produce at different cost levels. First we prove the existence and the properties of a noncooperative equilibrium. Then, we show that the higher (lower) the discount rate, the lower (higher) the probability of innovating of the current leader. In a specialised version of the model we establish the effect of the productivity of R&D espenditure, initial cost gap, and market size on the expected identity of the winner of the patent race.

Suggested Citation

  • F. Delbono & V. Denicolo', 1988. "Asymmetric Races of Research and Development," Working Papers 51, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:51
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