Sequencing R&D Decisions in a Two-period Duopoly with Spillovers
AbstractWe 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 InfoPaper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 1999-06.
Length: 26 pages
Date of creation: May 1999
Date of revision:
Publication status: Published in: Economic Theory. March 2000; 15(2): 297-317
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R&D spillovers; Cournot duopoly; subgame-perfect equilibrium; endogenous timing;
Other versions of this item:
- Jim Jin & Rabah Amir & Madjid Amir, 2000. "Sequencing R&D decisions in a two-period duopoly with spillovers," Economic Theory, Springer, vol. 15(2), pages 297-317.
- 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
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
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- Tobias Kretschmer & Katrin Muehlfeld, 2006.
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- 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.
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