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Strategic Investment with Asymmetric Spillovers

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  • Raymond De Bondt
  • Irene Henriques

Abstract

This paper investigates the implications of asymmetric spillovers on noncooperative strategic investments in a duopoly with quadratic pay-offs. A unique equilibrium in the announcement of the leader/follower role exists in the case where one firm absorbs large spillovers while the other, at most, is able to receive only small spillovers. The leader in this equilibrium is the firm that absorbs the large spillovers. Other asymmetries in initial costs or efficiency in research and development do not affect this outcome.

Suggested Citation

  • Raymond De Bondt & Irene Henriques, 1995. "Strategic Investment with Asymmetric Spillovers," Canadian Journal of Economics, Canadian Economics Association, vol. 28(3), pages 656-674, August.
  • Handle: RePEc:cje:issued:v:28:y:1995:i:3:p:656-74
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    Citations

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    Cited by:

    1. Cassiman, Bruno, 2000. "Research joint ventures and optimal R&D policy with asymmetric information," International Journal of Industrial Organization, Elsevier, vol. 18(2), pages 283-314, February.
    2. repec:ebl:ecbull:v:12:y:2005:i:18:p:1-11 is not listed on IDEAS
    3. Ofori, F., 2011. "Sources of International Economic Spillovers to Ghana's Economic Growth," MPRA Paper 30455, University Library of Munich, Germany.
    4. Reinhilde Veugelers & Katrien Kesteloot, 1996. "Bargained shares in joint ventures among asymmetric partners: Is the matthew effect catalyzing?," Journal of Economics, Springer, vol. 64(1), pages 23-51, February.
    5. Kornelius Kraft & Jörg Stank & Ralf Dewenter, 2011. "Co-determination and innovation," Cambridge Journal of Economics, Oxford University Press, vol. 35(1), pages 145-172.
    6. Silipo, Damiano B., 2008. "Incentives and forms of cooperation in research and development," Research in Economics, Elsevier, vol. 62(2), pages 101-119, June.
    7. Marco A. Marini & Maria L. Petit & Roberta Sestini, 2014. "Strategic timing in R&D agreements," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 23(3), pages 274-303, April.
    8. Ishii, Akira, 2004. "Cooperative R&D between vertically related firms with spillovers," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1213-1235, November.
    9. Kyung Hwan Baik & Todd Cherry & Stephan Kroll & Jason Shogren, 1999. "Endogenous Timing in a Gaming Tournament," Theory and Decision, Springer, vol. 47(1), pages 1-21, August.
    10. Claude Crampes & Corinne Langinier, 2009. "Are Intellectual Property Rights Detrimental to Innovation?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 16(3), pages 249-268.
    11. Veldman, Jasper & Gaalman, Gerard J.C., 2015. "Competitive investments in cost reducing process improvement: The role of managerial incentives and spillover learning," International Journal of Production Economics, Elsevier, vol. 170(PB), pages 701-709.
    12. Somma, Ernesto, 1999. "The effect of incomplete information about future technological opportunities on pre-emption," International Journal of Industrial Organization, Elsevier, vol. 17(6), pages 765-799, August.
    13. Dirk Czarnitzki & Kornelius Kraft, 2012. "Spillovers of innovation activities and their profitability," Oxford Economic Papers, Oxford University Press, vol. 64(2), pages 302-322, April.
    14. Dermot Leahy & Alireza Naghavi, 2010. "Intellectual Property Rights and Entry into a Foreign Market: FDI versus Joint Ventures," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 633-649, September.
    15. Kim, Jeong-Eon, 2003. "Three essays on welfare implications of R&D policies in the presence of spillovers," ISU General Staff Papers 200301010800001597, Iowa State University, Department of Economics.
    16. repec:kap:expeco:v:20:y:2017:i:3:d:10.1007_s10683-016-9500-5 is not listed on IDEAS
    17. Aloysius, John A., 2002. "Research joint ventures: A cooperative game for competitors," European Journal of Operational Research, Elsevier, vol. 136(3), pages 591-602, February.
    18. Ivano D'Antonio, 2015. "Cooperazione e spesa in R&S: evidenze empiriche dalla Community Innovation Survey," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2015(116), pages 90-110.
    19. De Bondt, Raymond, 1997. "Spillovers and innovative activities," International Journal of Industrial Organization, Elsevier, vol. 15(1), pages 1-28, February.
    20. Kaiser, Ulrich, 2002. "An empirical test of models explaining research expenditures and research cooperation: evidence for the German service sector," International Journal of Industrial Organization, Elsevier, vol. 20(6), pages 747-774, June.
    21. Das, Gouranga, 2000. "Absorptive capacity and structural congruence: the binding constraints on the acquisition of technology--an analytical survey of the underlying issues," MPRA Paper 37257, University Library of Munich, Germany, revised 01 Jan 2001.
    22. Joseph Plasmans & Ruslan Lukatch, 2001. "Measuring Knowledge Spillovers Using Belgian EPO and USPTO Patent Data," CESifo Working Paper Series 430, CESifo Group Munich.

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