Innovation races: An experimental study on strategic research activities
AbstractIn an experimental setting, firms in a duopoly market engage in a patent tournament and compete for profit-enhancing product advancements. The firms generate income by matching exogenously defined demand preferences with an appropriately composed product portfolio of their own. Demand preferences are initially unknown and first need to be revealed by an investigation of the possible product variations. The better firms approximate demand preferences, the higher their profits. In the ensuing innovation race, firms interact through information spillovers resulting from the imperfect appropriability of research successes. In the random period of the experiment, the continuity of the search process is disturbed by an exogenous shock that affects both the supply and demand side and again spurs research competition. Firms may henceforth explore an enlarged product space in attempting to match the equally modified demand preferences. In our analysis, we explore the behavioural regularities of agents who are engaged in innovation activities. As a key element we test to what extend relative economic performance exercises a stimulating effect on the implementation of innovation and imitation strategies.
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Bibliographic InfoPaper provided by Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät in its series Jenaer Schriften zur Wirtschaftswissenschaft with number 17/2005.
Date of creation: 07 Nov 2005
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Other versions of this item:
- Uwe Cantner & Andreas Nicklisch & Torsten Weiland, 2005. "Innovation races: An experimental study on strategic research activities," Papers on Strategic Interaction 2005-14, Max Planck Institute of Economics, Strategic Interaction Group.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- 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-2005-11-12 (All new papers)
- NEP-CBE-2005-11-12 (Cognitive & Behavioural Economics)
- NEP-EXP-2005-11-12 (Experimental Economics)
- NEP-INO-2005-11-12 (Innovation)
- NEP-MIC-2005-11-12 (Microeconomics)
- NEP-TID-2005-11-12 (Technology & Industrial Dynamics)
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