We provide an extensive comparison of the R&D models of d'Aspremont-Jacquemin (1988) and Kamien-Muller-Zang (1992), exposing full or partial conflict in key conclusions and policy prescriptions. Using three separate formal and/or intuitive criteria, we argue that the first model is invalid for large spillover values. This conclusion is corroborated by an additional argument leading to equivalence between the two R&D processes, but not to agreement on some key conclusions. Hence, the models emerge as fundamentally different, although a unilateral shift in the cost function of the first leads to agreement in all equilibrium outcomes.
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Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number
1998-07.
Length: 14 pages Date of creation: Jul 1998 Date of revision: Publication status: Published in: International Journal of Industrial Organization. October 2000; 18(7): 1013-32 Handle: RePEc:kud:kuieci:1998-07
Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games 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
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