A Duopoly Experiment on Cooperative and Noncooperative R&D
AbstractIn this paper an experimental environment to test theoretical predictions concerning R&D behavior of firms in duopoly with allowance for R&D spillovers is created. The design and hypotheses of the experiment are based on the well-known model of d Aspremont and Jacquemin in which R&D behavior of firms either competing or cooperating in R&D, is calculated. No di.erence in behavior between di.erent spillover levels is found. Further, I find that irrespective of the technological spillover level subjects do not always commit to an R&D contract but if they commit to an R&D level in a binding contract, cooperative R&D levels are chosen. When subjects do not or cannot commit to a contract, the subgame perfect Nash equilibrium performs well in predicting R&D decisions.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2003-77.
Date of creation: 2003
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research and development; duopoly; competition; nash equilibrium; technological change;
Find related papers by JEL classification:
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
- 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-2003-09-08 (All new papers)
- NEP-EXP-2003-09-08 (Experimental Economics)
- NEP-IND-2003-09-08 (Industrial Organization)
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