Closed-Loop Equilibrium in a Multi-Stage Innovation Race
AbstractWe examine a multistage model of an R&D race where players have multiple projects. We also develop perturbation methods for general dynamic games that can be expressed as analytic operators in a Banach space. We apply these perturbation methods to solve races with a small prize. We compute second-order asymptotically valid solutions for equilibrium and socially optimal decisions to determine qualitative properties of equilibrium. We find that innovators invest relatively too much on risky projects. Strategic reactions are ambiguous in general; in particular, a player may increase expenditures as his opponent moves ahead of him. Copyright Springer-Verlag Berlin Heidelberg 2003
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 647.
Date of creation: Feb 1985
Date of revision:
Contact details of provider:
Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014
Web page: http://www.kellogg.northwestern.edu/research/math/
More information through EDIRC
Other versions of this item:
- Kenneth L. Judd, 2003. "Closed-loop equilibrium in a multi-stage innovation race," Economic Theory, Springer, vol. 21(2), pages 673-695, 03.
- JEL - Labor and Demographic Economics - - - - -
- Cla - Mathematical and Quantitative Methods - - - - -
- Num - Economic History - - - - -
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kenneth Judd & Karl Schmedders, 2002.
"Optimal Rules for Patent Races,"
1343, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Bondarev, Anton A., 2011. "Endogenous specialization of heterogeneous innovative activities of firms under technological spillovers," MPRA Paper 35424, University Library of Munich, Germany, revised 15 Dec 2011.
- Nisvan Erkal & Deborah Minehart, 2008.
"Optimal Sharing Strategies in Dynamic Games of Research and Development,"
EAG Discussions Papers
200806, Department of Justice, Antitrust Division.
- Nisvan Erkal & Deborah Minehart, 2007. "Optimal Sharing Strategies in Dynamic Games of Research and Development," EAG Discussions Papers 200707, Department of Justice, Antitrust Division.
- Nisvan Erkal & Deborah Minehart, 2008. "Optimal Sharing Strategies in Dynamic Games of Research and Development," Department of Economics - Working Papers Series 1038, The University of Melbourne.
- Schivardi, Fabiano & Schneider, Martin, 2005.
"Strategic Experimentation and Disruptive Technological Change,"
CEPR Discussion Papers
4925, C.E.P.R. Discussion Papers.
- Fabiano Schivardi & Martin Schneider, 2008. "Strategic Experimentation and Disruptive Technological Change," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 386-412, April.
- Gene M. Grossman & Carl Shapiro, 1986.
"Optimal Dynamic R&D Programs,"
RAND Journal of Economics,
The RAND Corporation, vol. 17(4), pages 581-593, Winter.
- Gene M. Grossman & Carl Shapiro, 1988.
"Dynamic R&D Competition,"
NBER Working Papers
1674, National Bureau of Economic Research, Inc.
- Kenneth L. Judd, 1997.
"Computational Economics and Economic Theory: Substitutes or Complements,"
NBER Technical Working Papers
0208, National Bureau of Economic Research, Inc.
- Judd, Kenneth L., 1997. "Computational economics and economic theory: Substitutes or complements?," Journal of Economic Dynamics and Control, Elsevier, vol. 21(6), pages 907-942, June.
- Liad Wagman & Vincent Conitzer, 2012.
"Choosing fair lotteries to defeat the competition,"
International Journal of Game Theory,
Springer, vol. 41(1), pages 91-129, February.
- David Gill, 2004.
"Strategic Disclosure of Intermediate Research Results,"
Economics Series Working Papers
211, University of Oxford, Department of Economics.
- David Gill, 2008. "Strategic Disclosure of Intermediate Research Results," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(3), pages 733-758, 09.
- Nicholas Economides & Matt Mitchell, 2004.
"Dynamic Oligopoly with Network Effects,"
2004 Meeting Papers
665, Society for Economic Dynamics.
- Economides, Nicholas & Mitchell, Matthew & Skrzypacz, Andrzej, 2004. "Dynamic Oligopoly with Network Effects," Santa Cruz Department of Economics, Working Paper Series qt3z59c4p7, Department of Economics, UC Santa Cruz.
- Meng, Rujing, 2008. "A patent race in a real options setting: Investment strategy, valuation, CAPM beta, and return volatility," Journal of Economic Dynamics and Control, Elsevier, vol. 32(10), pages 3192-3217, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fran Walker).
If references are entirely missing, you can add them using this form.