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

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Author Info
Rabah Amir (Institute of Economics, University of Copenhagen)
John Wooders (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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Publisher Info
Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 1998-10.

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Length: 11 pages
Date of creation: Jun 1998
Date of revision:
Publication status: Published in: Games and Economic Behaviour, 31(1), 2000, 1-25
Handle: RePEc:kud:kuieci:1998-10

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Related research
Keywords: oligopolistic R&D one-way spillovers research joint ventures submodularity

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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
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)
  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)
    Other versions:
  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)
    Other versions:
  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)
    Other versions:
  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!]
  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. Gamal Atallah, 2005. "Research Joint Ventures Cartelization with Asymmetric R&D Spillovers," Economics Bulletin, Economics Bulletin, vol. 12(18), pages 1-11. [Downloadable!]
  4. 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!]
  5. 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!]
  6. Cassiman, Bruno & Pérez-Castrillo, David, 2000. "Endogenizing know-how flows through the nature of R&D investments," IESE Research Papers D/428, IESE Business School. [Downloadable!]
    Other versions:
  7. Suetens, S., 2003. "A duopoly experiment on cooperative and noncooperative r&d," Discussion Paper 77, Tilburg University, Center for Economic Research. [Downloadable!]
  8. Vives, Xavier, 2006. "Strategic Complementarities in Multi-Stage Games," CEPR Discussion Papers 5583, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. Georg von Graevenitz, 2004. "Spillovers Reconsidered: Analysing Economic Welfare under complementarities in R&D," Discussion Papers 29, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
    Other versions:
  10. 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)
  11. 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!]
  12. Toshihiro Matsumura, 2003. "Strategic R and D investments with uncertainty," Economics Bulletin, Economics Bulletin, vol. 12(1), pages 1-7. [Downloadable!]
  13. 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:
  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. 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)
  16. Vives, Xavier, 2006. "Strategic complementarity in multi-stage games," IESE Research Papers D/619, IESE Business School.
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