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Noncooperative versus cooperative R&D with endogenous spillover rates

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Author Info
AMIR, Rabah
EVSTIGNEEV, Igor
WOODERS, John

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Abstract

This paper deals with a general version of a two-stage model of R&D and product market competition. We provide a thorough generalization of previous results on the comparative performance of noncooperative and cooperative R&D, dispensing in particular with ex-post firm symmetry and linear demand assumptions. We also characterize the structure of profit-maximizing R&D cartels where firms competing in a product market jointly decide R&D expenditure, as well as internal spillover, levels. We establish the firms would essentially always prefer extremal spillovers, and within the context of a standard specification, derive conditions for the optimality of minimal spillover.

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Publisher Info
Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2001050.

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Date of creation: 01 Oct 2001
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Handle: RePEc:cor:louvco:2001050

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Related research
Keywords: oligopolistic R&D; endogenous spillovers; research joint ventures; R&D cartel;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives

References listed on IDEAS
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  1. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-77, November. [Downloadable!] (restricted)
  2. Rabah Amir, 2000. "On the Effects of Entry in Cournot Markets," Econometric Society World Congress 2000 Contributed Papers 1475, Econometric Society. [Downloadable!]
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  3. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December. [Downloadable!] (restricted)
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  4. Long, Ngo Van & Soubeyran, Antoine, 2001. "Cost Manipulation Games in Oligopoly, with Costs of Manipulating," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(2), pages 505-33, May.
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  5. Susan Athey & Armin Schmutzler, 1995. "Product and Process Flexibility in an Innovative Environment," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 557-574, Winter. [Downloadable!] (restricted)
  6. Milgrom, Paul & Roberts, John, 1994. "Comparing Equilibria," American Economic Review, American Economic Association, vol. 84(3), pages 441-59, June. [Downloadable!] (restricted)
  7. d' Aspremont, Claude & Bhattacharya, Sudipto & Gerard-Varet, Louis-Andre, 2000. "Bargaining and Sharing Innovative Knowledge," Review of Economic Studies, Blackwell Publishing, vol. 67(2), pages 255-71, April.
  8. Röller, Lars-Hendrik & Siebert, Ralph & Tombak, Mihkel, 1997. "Why Firms Form Research Joint Ventures: Theory and Evidence," CEPR Discussion Papers 1654, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. repec:fth:harver:1473 is not listed on IDEAS
  10. Amir, Rabah, 1996. "Cournot Oligopoly and the Theory of Supermodular Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 132-148, August. [Downloadable!] (restricted)
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  11. Ruff, Larry E., 1969. "Research and technological progress in a cournot economy," Journal of Economic Theory, Elsevier, vol. 1(4), pages 397-415, December. [Downloadable!] (restricted)
  12. Bergstrom, Theodore C & Varian, Hal R, 1985. "When Are Nash Equilibria Independent of the Distribution of Agents' Characteristics?," Review of Economic Studies, Blackwell Publishing, vol. 52(4), pages 715-18, October. [Downloadable!] (restricted)
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  13. d'Aspremont, Claude & Bhattacharya, Sudipto & Gerard-Varet, Louis-Andre, 1998. "Knowledge as a public good: efficient sharing and incentives for development effort," Journal of Mathematical Economics, Elsevier, vol. 30(4), pages 389-404, November. [Downloadable!] (restricted)
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  14. Amir, Rabah & Wooders, John, 2000. "One-Way Spillovers, Endogenous Innovator/Imitator Roles, and Research Joint Ventures," Games and Economic Behavior, Elsevier, vol. 31(1), pages 1-25, April. [Downloadable!] (restricted)
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  15. Kamien, Morton I & Zang, Israel, 1993. "Competing Research Joint Ventures," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 2(1), pages 23-40, Spring.
  16. Stephen W. Salant & Greg Shaffer, 1999. "Unequal Treatment of Identical Agents in Cournot Equilibrium," American Economic Review, American Economic Association, vol. 89(3), pages 585-604, June. [Downloadable!] (restricted)
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  18. Athey, Susan & Schmutzler, Armin, 2001. "Investment and Market Dominance," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 1-26, Spring.
  19. Michael L. Katz, 1986. "An Analysis of Cooperative Research and Development," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 527-543, Winter.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ruslan Lukach & Joseph Plasmans & Peter M. Kort, 2005. "Innovation Strategies in a Competitive Dynamic Setting," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  2. Sami Dakhlia & Flavio Menezes & Akram Temimi, 2004. "A note on duplication of R&D and R&D subsidies," Economics Bulletin, Economics Bulletin, vol. 12(7), pages 1-5. [Downloadable!]
    Other versions:
  3. Sami Dakhlia & Flavio M. Menezes & Akram Temimi, 2005. "The Role of R&D Technology in Asymmetric Research Joint Ventures," Microeconomics 0505003, EconWPA. [Downloadable!]
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  4. Antonio, TESORIERE, 2007. "Allocating cost reducing investments over competing divisions," Discussion Papers (ECON - Département des Sciences Economiques) 2007021, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
  5. Constantine Manasakis & Emmanuel Petrakis, 2005. "Downstream Research Joint Venture with Upstream Market Power," Working Papers 0513, University of Crete, Department of Economics. [Downloadable!]
  6. Belderbos, René & Carree, Martin & Lokshin, Boris, 2006. "Complementarity in R&D cooperation strategies," Research Memoranda 013, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
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  7. BELLEFLAMME, Paul & VERGARI, Cecilia, 2006. "Incentives to innovate in oligopolies," CORE Discussion Papers 2006014, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
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  8. repec:bep:eaptop:v:6:y:2006:i:1:p:1572-1572 is not listed on IDEAS
  9. Belderbos,René & Carree,Martin & Lokshin,Boris, 2004. "Cooperative R&D and Firm Performance," Research Memoranda 022, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
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  10. Antonio Tesoriere, 2008. "A Further Note on Endogenous Spillovers in a Non-tournament R&D Duopoly," Review of Industrial Organization, Springer, vol. 33(2), pages 177-184, September. [Downloadable!] (restricted)
  11. Bruno Versaevel & Désiré Vencatachellum, 2008. "Horizontal R and D cooperation and spillovers: evidence from France," Economics Bulletin, Economics Bulletin, vol. 15(19), pages 1-11. [Downloadable!]
  12. Christine Halmenschlager, 2004. "R&D-cooperating laggards versus a technological leader," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 13(8), pages 717-732, December. [Downloadable!] (restricted)
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  13. Michelle S. Goeree & Jeroen Hinloopen, 2008. "Cooperation in the Classroom: Experimenting with R&D Cooperatives," Journal of Economic Education, Helen Dwight Reid Foundation, vol. 39(4), pages 357-373. [Downloadable!]
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  14. Binenbaum, Eran & Pardey, Philip G., 2005. "Collective Action in Plant Breeding," 2005 Annual meeting, July 24-27, Providence, RI 19530, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  15. Roman Inderst & Tommaso Valletti, 2006. "Price Discrimination in Input Markets," CEIS Research Paper 73, Tor Vergata University, CEIS. [Downloadable!]
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