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

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Author Info
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://129.3.20.41/eps/io/papers/0012/0012005.pdf
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Paper provided by EconWPA in its series Industrial Organization with number 0012005.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
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://129.3.20.41

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

Find related papers by JEL classification:
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy

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    Other versions:
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  13. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January. [Downloadable!] (restricted)
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    Other versions:
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