AbstractIn an extended version of d'Aspremont and Jacquemin's (1988) R&D competition model, we identify a region where the game is a prisoner's dilemma in that region firms' optimal strategy still prescribes to invest in R&D. However, they would obtain a higher profit by not investing at all. A standard Folk Theorem argument suggests that firms implicitly tend to collude and refrain from investing in R&D when their interaction is repeated. When this happens, social welfare shrinks, but we argue that promoting joint research constitutes a remedy to the lack of innovation efforts, rather than the excess thereof.
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Bibliographic InfoPaper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number 651.
Date of creation: Nov 2008
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Other versions of this item:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-16 (All new papers)
- NEP-COM-2009-05-16 (Industrial Competition)
- NEP-IND-2009-05-16 (Industrial Organization)
- NEP-INO-2009-05-16 (Innovation)
- NEP-MIC-2009-05-16 (Microeconomics)
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"Cooperative and Noncooperative R&D in Duopoly with Spillovers,"
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- d'Aspremont, Claude & Jacquemin, Alexis, 1990.
"Cooperative and Noncooperative R&D in Duopoly with Spillovers: Erratum,"
American Economic Review,
American Economic Association, vol. 80(3), pages 641-42, June.
- d'ASPREMONT, Claude & JACQUEMIN, Alexis, . "Cooperative and noncooperative R&D in duopoly with spillovers: Erratum," CORE Discussion Papers RP -892, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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- Burr, Chrystie & Knauff, Malgorzata & Stepanova, Anna, 2013. "On the prisoner’s dilemma in R&D with input spillovers and incentives for R&D cooperation," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 254-261.
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