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Sequencing R&D Decisions in a Two-period Duopoly with Spillovers

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Author Info

  • Madjid Amir

    (University of Kalsruhe)

  • Rabah Amir

    (University of Southern Denmark)

  • Jim Jin

    (The Queen's University of Belfast)

Abstract

We compare simultaneous versus sequential moves in R&D decisions within an asymmetric R&D/Cournot model with linear demand (for differentiated products), general R&D costs, and spillovers. Simultaneous play and sequential play (with and without a specified leader) can emerge as appropriate formulations, depending on the ratios of spillover rate over demand cross-slope, but not on R&D efficiency. When at least one ratio is above ½, a sequential solution mitigates competition and leads to higher profits for each firm, and to higher social welfare. When uniquely specified, the stronger firm emerges as the R&D first-mover.

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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 1999-06.

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Length: 26 pages
Date of creation: May 1999
Date of revision:
Publication status: Published in: Economic Theory. March 2000; 15(2): 297-317
Handle: RePEc:kud:kuieci:1999-06

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Web page: http://www.econ.ku.dk/cie/
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Keywords: R&D spillovers; Cournot duopoly; subgame-perfect equilibrium; endogenous timing;

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Cited by:
  1. Tobias Kretschmer & Katrin Muehlfeld, 2006. "Co-opetition and prelaunch in standard-setting for developing technologies," LSE Research Online Documents on Economics 19843, London School of Economics and Political Science, LSE Library.
  2. TESORIERE, Antonio, 2005. "Endogenous R&D symmetry in linear duopoly with one-way spillovers," CORE Discussion Papers 2005045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. SUETENS, Sigrid, 2004. "Literature review: R&D cooperation in oligopoly with spillovers: An experimental economics approach," Working Papers 2004024, University of Antwerp, Faculty of Applied Economics.
  4. Marco Marini & Giorgio Rodano, 2011. "Lead, Follow or Cooperate? Endogenous Timing & Cooperation in Symmetric Duopoly Games," Working Papers 1112, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
  5. Marco Marini & Giorgio Rodano, 2012. "Sequential vs Collusive Payoffs in Symmetric Duopoly Games," DIAG Technical Reports 2012-06, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".

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