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R&D incentives with uncertain probability of success

Author

Listed:
  • Chatterjee, Rittwik
  • Chattopadhyay, Srobonti
  • Kabiraj, Tarun

Abstract

A firm’s decision to invest in R&D depends on a number of factors like availability of funds, extent of R&D spillovers, market structure, and success probability. However, probability of success depends, to a large extent, on factors endogenous to a firm. This means, success probability can be known to the firm undertaking R&D investment, not to the rivals, hence there is incomplete information about probability of success in R&D. There are also uncertainties about rival’s R&D decision and R&D status. In a duopoly we show that there is a non-monotone relation between R&D incentives and the level of information.

Suggested Citation

  • Chatterjee, Rittwik & Chattopadhyay, Srobonti & Kabiraj, Tarun, 2020. "R&D incentives with uncertain probability of success," MPRA Paper 98474, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:98474
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    References listed on IDEAS

    as
    1. Emanuele Bacchiega & Paolo G. Garella, 2008. "Disclosing Versus Withholding Technology Knowledge In A Duopoly," Manchester School, University of Manchester, vol. 76(1), pages 88-103, January.
    2. Chiara CONTI, 2013. "Asymmetric information in a duopoly with spillovers: new findings on the effects of RJVs," Departmental Working Papers 2013-04, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    3. Tarun Kabiraj & Srobonti Chattopadhyay, 2015. "Cooperative vs. non-cooperative R&D incentives under incomplete information," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 24(6), pages 624-632, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    R&D incentives; Duopoly; Incomplete information; Type distribution;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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