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Cooperative and Noncooperative R&D in an Oligopoly with Spillovers

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  • Suzumura, Kotaro

Abstract

This paper examines the positive and normative effects of cooperative R&D--whereby member firms commit themselves to the joint profit-maximizing level of R&D in a "precompetitive stage" but remain fierce competitors in the product market--vis-a-vis noncooperative R&D, socially first-best R&D, and socially second-best R&D. In the presence of sufficiently large R&D spillovers, neither noncooperative nor cooperative equilibria achieve even second-best R&D levels. In the absence of spillover effects, however, while the cooperative R&D level remains socially insufficient, the noncooperative level may overshoot first- and second-best levels of R&D. Copyright 1992 by American Economic Association.

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  • Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, vol. 82(5), pages 1307-1320, December.
  • Handle: RePEc:aea:aecrev:v:82:y:1992:i:5:p:1307-20
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    References listed on IDEAS

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