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R&D investments and spillovers under endogenous technological opportunity

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  • Mário Alexandre Patrício Martins da Silva

    (Faculdade de Economia do Porto)

Abstract

In this paper, we focus on endogenous technological opportunity and its effects upon R&D outcomes in the independent and cooperative cases. In light of the importance of spillovers in economic analysis of R&D incentives, we examine the relationship between R&D appropriability and R&D investment in the presence of an endogenous technological opportunity. In order to do this, we develop a three-stage game in which firms first choose their R&D orientations, then how much to invest in R&D, and finally their Cournot outputs. Contrary to the usual assumption made in oligopoly models that technological opportunity is external to the industry where firms operate, we fully endogenize technological possibilities through the firms’ choices of their R&D approaches. We find that competing firms invest more in R&D as spillovers increase (and R&D appropriability diminishes) but still less than cooperating firms no matter the degree of exogenous spillovers. This is a reversal of well-known results established in the literature on R&D and spillovers.

Suggested Citation

  • Mário Alexandre Patrício Martins da Silva, 2016. "R&D investments and spillovers under endogenous technological opportunity," FEP Working Papers 571, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:571
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    References listed on IDEAS

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    More about this item

    Keywords

    Technological opportunity; R&D spillovers; R&D investment; absorptive capacity;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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