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R&D cooperation in a three-firm Cournot industry

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  • Abhishek Kabiraj

    (Narayana Hrudayalaya Ltd., India)

Abstract

In a three firm structure, given that research outcome is uncertain, we discuss the choice of R&D organization. Cooperative research takes the form of RJV or knowledge sharing (KS) only, and this is optimally chosen at the research stage. Then the successful firms play Cournot at the production stage. We characterize subgame perfect equilibria for all possible values of the probability of success. We show that KS alone can never be a part of subgame perfect equilibrium. In equilibrium, RJV strictly dominates non-cooperative research for all low and high probabilities of success, and for intermediate values non-cooperative R&D occurs.

Suggested Citation

  • Abhishek Kabiraj, 2018. "R&D cooperation in a three-firm Cournot industry," Economics Bulletin, AccessEcon, vol. 38(3), pages 1541-1546.
    • Handle: RePEc:ebl:ecbull:eb-18-00678
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    References listed on IDEAS

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    Cited by:

    1. Kabiraj, Abhishek & Kabiraj, Tarun, 2019. "Uncertain R&D Outcomes and Cooperation in R&D," MPRA Paper 94676, University Library of Munich, Germany.
    2. Chatterjee, Rittwik & Kabiraj, Tarun, 2023. "Cooperative vs. Non-cooperative R&D under Uncertain Probability of Success," MPRA Paper 117623, University Library of Munich, Germany.

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    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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