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R&D in Duopoly with Spillovers: Evolution and Aspiration Learning

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  • Stepan Cabelka

    (CERGE-EI)

  • Jacek Cukrowski

    (CERGE-EI)

Abstract

The paper applies the evolutionary concept to an analysis of the role of intellectual property rights protection in the model of two countries North and South (and two firms) where only the Northern firm conducts innovative activity. The concept of social evolution and learning in oligopolistic industries (an aspiration-based model) is developed and the general algorithm of social evolution and aspiration learning for asymmetric duopoly is presented. The evolutionary equilibrium in R&D duopoly with spillovers is presented and analyzed. The results show that strengthening intellectual property rights protection always has negative welfare effects. In particular, it decreases not only the profit (producer surplus) of both the Northern and the Southern firms, but also the consumer surplus in both countries, and, consequently, it lowers social welfare in both countries.

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File URL: http://128.118.178.162/eps/io/papers/0012/0012005.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0012005.

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Length: 37 pages
Date of creation: 19 Feb 2001
Date of revision:
Handle: RePEc:wpa:wuwpio:0012005

Note: Type of Document - Acrobat PDF; pages: 37 ; figures: Included
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Web page: http://128.118.178.162

Related research

Keywords: Aspiration learning; Social evolution; Research and development; Duopoly; Spillovers;

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References

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