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One-Way Spillovers, Endogenous Innovator/Imitator Roles and Research Joint Ventures

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Author Info
Amir, Rabah (Wissenschaftszentrum Berlin)
Wooders, John (Department of Economics, University of Arizona)

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Abstract

We consider a two-period duopoly characterized by a one-way spillover structure in process R&D and a very broad specification of product market competition. We show that a priori identical firms always engage in different levels of R&D, at equilibrium, thus giving rise to an innovator/imitator configuration and ending up with different sizes. In view of this endogenous firm heterogeneity, the social benefits of, and the firms' incentives for, research joint ventures are somewhat different from the case of ex post firm symmetry. The key properties of the game are submodularity (R&D decisions are strategic substitutes) and lack of global concavity.

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File URL: http://www.ihs.ac.at/publications/eco/es-43.pdf
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File Function: First version, 1997
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Publisher Info
Paper provided by Institute for Advanced Studies in its series Economics Series with number 43.

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Length: 36 pages
Date of creation: May 1997
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Handle: RePEc:ihs:ihsesp:43

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Related research
Keywords: Oligopolistic R&D; One-Way Spillovers; Research Joint Ventures; Submodularity;

Other versions of this item:

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
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D

References listed on IDEAS
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. De Bondt, Raymond & Slaets, Patrick & Cassiman, Bruno, 1992. "The degree of spillovers and the number of rivals for maximum effective R &D," International Journal of Industrial Organization, Elsevier, vol. 10(1), pages 35-54, March. [Downloadable!] (restricted)
  2. d'Aspremont, Claude & Jacquemin, Alexis, 1988. "Cooperative and Noncooperative R&D in Duopoly with Spillovers," American Economic Review, American Economic Association, vol. 78(5), pages 1133-37, December. [Downloadable!] (restricted)
  3. Caves, R E & Porter, M E, 1977. "From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deterrence to New Competition," The Quarterly Journal of Economics, MIT Press, vol. 91(2), pages 241-61, May. [Downloadable!] (restricted)
  4. Mansfield, Edwin, 1985. "How Rapidly Does New Industrial Technology Leak Out?," Journal of Industrial Economics, Blackwell Publishing, vol. 34(2), pages 217-23, December. [Downloadable!] (restricted)
  5. 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)
  6. Novshek, William, 1985. "On the Existence of Cournot Equilibrium," Review of Economic Studies, Blackwell Publishing, vol. 52(1), pages 85-98, January. [Downloadable!] (restricted)
    Other versions:
  7. Lambson, Val Eugene, 1992. "Competitive Profits in the Long Run," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 125-42, January. [Downloadable!] (restricted)
  8. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-80, January. [Downloadable!] (restricted)
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  9. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December. [Downloadable!] (restricted)
  10. Amir, Rabah, 1996. "Continuous Stochastic Games of Capital Accumulation with Convex Transitions," Games and Economic Behavior, Elsevier, vol. 15(2), pages 111-131, August. [Downloadable!] (restricted)
  11. Rabah Amir & John Wooders, 1999. "Effects of One-Way Spillovers on Market Shares, Industry Price, Welfare, and R & D Cooperation," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 8(2), pages 223-249, 06. [Downloadable!] (restricted)
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  12. Richard Gilbert & Carl Shapiro, 1990. "Optimal Patent Length and Breadth," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 106-112, Spring. [Downloadable!] (restricted)
    Other versions:
  13. Benjamin E. Hermalin, 1994. "Heterogeneity in Organizational Form: Why Otherwise Identical Firms Choose Different Incentives for Their Managers," RAND Journal of Economics, The RAND Corporation, vol. 25(4), pages 518-537, Winter. [Downloadable!] (restricted)
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  14. 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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  15. Rabah Amir, 1998. "Modelling Imperfectly Appropriable R&D via Spillovers," CIE Discussion Papers 1998-07, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    Other versions:
  16. Arthur Fishman & Rafael Rob, 1993. "The durability of information, market efficiency, and the size of firms," Working Papers 94-4, Federal Reserve Bank of Philadelphia.
    Other versions:
  17. 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)
    Other versions:
  18. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May. [Downloadable!] (restricted)
  19. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-21, January. [Downloadable!] (restricted)
  20. 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.
  21. Salant, S.W. & Shaffer, G., 1992. "Optimal Asymmetric Strategies in Research Joint Ventures: A Comment on the Literature," Papers 93-06, Michigan - Center for Research on Economic & Social Theory.
  22. Roller, Lars-Hendrik & Sinclair-Desgagne, Bernard, 1996. "On the heterogeneity of firms," European Economic Review, Elsevier, vol. 40(3-5), pages 531-539, April. [Downloadable!] (restricted)
Full references

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. Rabah Amir & Filomena Garcia & Malgorzata Knauff, 2006. "Endogenous Heterogeneity in Strategic Models: Symmetry-breaking via Strategic Substitutes and Nonconcavities," Working Papers 2006/29, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
    Other versions:
  2. C. Halmenschlager, 2003. "Les externalités de diffusion du savoir-faire permettent- elles de rattraper le retard dans les courses à l'innovation," Working Papers ERMES 0304, ERMES, University Paris 2. [Downloadable!]
  3. David Pérez-Castrillo & Bruno Cassiman & Reinhilde Veugelers, 2000. "Endogeneizing know-how flows through the nature of R&D investments," UFAE and IAE Working Papers 464.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
    Other versions:
  4. Gamal Atallah, 2005. "Research Joint Ventures Cartelization with Asymmetric R&D Spillovers," Economics Bulletin, Economics Bulletin, vol. 12(18), pages 1-11. [Downloadable!]
  5. Stephane Verani, 2006. "Open Source Development in a Differentiated Duopoly," Economics Discussion / Working Papers 06-05, The University of Western Australia, Department of Economics. [Downloadable!]
  6. Georg von Graevenitz, 2005. "Spillovers Reconsidered: Analysing Economic Welfare under Complementarities in R&D," Industrial Organization 0503007, EconWPA. [Downloadable!]
    Other versions:
  7. Nicolai J. Foss & Thorbjørn Knudsen, 2003. "The resource-based tangle: towards a sustainable explanation of competitive advantage," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(4), pages 291-307. [Downloadable!]
    Other versions:
  8. Suetens, S., 2003. "A duopoly experiment on cooperative and noncooperative r&d," Discussion Paper 77, Tilburg University, Center for Economic Research. [Downloadable!]
  9. Vives, Xavier, 2006. "Strategic complementarity in multi-stage games," IESE Research Papers D/619, IESE Business School.
    Other versions:
  10. AMIR, Rabah & EVSTIGNEEV, Igor & WOODERS, John, 2001. "Noncooperative versus cooperative R&D with endogenous spillover rates," CORE Discussion Papers 2001050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
    Other versions:
  11. Arbussà, Anna & Coenders, Germà, 2005. "Innovation strategies in the presence of technology markets: evidence from Spanish innovative firms," Working Papers of the Department of Economics, University of Girona 15, Department of Economics, University of Girona. [Downloadable!]
  12. Vives, Xavier, 2006. "Strategic Complementarities in Multi-Stage Games," CEPR Discussion Papers 5583, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  13. AMIR, Rabah & NANNERUP, Niels & STEPANOVA, Anna & EGUIAZAROVA, Elina, 2001. "Monopoly versus R&D-integrated duopoly," CORE Discussion Papers 2001051, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
    Other versions:
  14. Nisvan Erkal:Daniel Piccinin, 2007. "Cooperative R&D under Uncertainty with Free Entry," Department of Economics - Working Papers Series 999, The University of Melbourne. [Downloadable!]
  15. 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)
  16. de Frutos, Maria-Angeles & Fabra, Natalia, 2007. "Endogenous Capacities and Price Competition: The Role of Demand Uncertainty," CEPR Discussion Papers 6096, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  17. Czarnitzki, Dirk & Kraft, Kornelius, 2007. "Spillovers of Innovation Activities and Their Profitability," ZEW Discussion Papers 07-073, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  18. Christian Wey, 1999. "Compatibility Investments in Duopoly with Demand Side Spillovers under Different Degrees of Cooperation," CIG Working Papers FS IV 99-02, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG), revised Aug 1999. [Downloadable!]
  19. Toshihiro Matsumura, 2003. "Strategic R and D investments with uncertainty," Economics Bulletin, Economics Bulletin, vol. 12(1), pages 1-7. [Downloadable!]
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