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Dynamic R&D with spillovers: Competition vs cooperation

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  • Cellini, Roberto
  • Lambertini, Luca

Abstract

We investigate dynamic R&D for process innovation in a Cournot duopoly where firms may either undertake independent ventures or form a cartel for cost-reducing R&D investments. By comparing the profit and welfare performances of the two settings in steady state, we show that private and social incentives towards R&D cooperation coincide for all admissible levels of the technological spillovers characterising innovative activity. We also evaluate the whole history of the dynamic system along the transition to the steady state, showing that the conflict between private and social incentives does not necessarily emerge.

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  • Cellini, Roberto & Lambertini, Luca, 2009. "Dynamic R&D with spillovers: Competition vs cooperation," Journal of Economic Dynamics and Control, Elsevier, vol. 33(3), pages 568-582, March.
  • Handle: RePEc:eee:dyncon:v:33:y:2009:i:3:p:568-582
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    Cited by:

    1. Bernard, Sophie, 2011. "Remanufacturing," Journal of Environmental Economics and Management, Elsevier, vol. 62(3), pages 337-351.
    2. Hasnas, Irina & Lambertini, Luca & Palestini, Arsen, 2014. "Open Innovation in a dynamic Cournot duopoly," Economic Modelling, Elsevier, vol. 36(C), pages 79-87.
    3. Hinloopen, J. & Smrkolj, G. & Wagener, F.O.O., 2013. "In Defense of Trusts: R&D Cooperation in Global Perspective," CeNDEF Working Papers 13-05, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
    4. Dawid, H. & Kopel, M. & Kort, P.M., 2013. "R&D competition versus R&D cooperation in oligopolistic markets with evolving structure," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 527-537.
    5. Hinloopen, Jeroen & Smrkolj, Grega & Wagener, Florian, 2013. "From mind to market: A global, dynamic analysis of R&D," Journal of Economic Dynamics and Control, Elsevier, pages 2729-2754.
    6. Italo Bischi, Gian & Lamantia, Fabio, 2012. "A dynamic model of oligopoly with R&D externalities along networks. Part II," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 84(C), pages 66-82.
    7. Feichtinger, Gustav & Lambertini, Luca & Leitmann, George & Wrzaczek, Stefan, 2016. "R&D for green technologies in a dynamic oligopoly: Schumpeter, arrow and inverted-U’s," European Journal of Operational Research, Elsevier, vol. 249(3), pages 1131-1138.
    8. Pan, Xiaojun & Li, Shoude, 2016. "Dynamic optimal control of process–product innovation with learning by doing," European Journal of Operational Research, Elsevier, vol. 248(1), pages 136-145.
    9. Duarte Leite & Pedro Campos & Isabel Mota, 2011. "Computational Results on Membership in R&D Cooperation Networks: To Be or Not To Be in a Research Joint Venture," FEP Working Papers 420, Universidade do Porto, Faculdade de Economia do Porto.
    10. repec:kap:iaecre:v:19:y:2013:i:4:p:439-449 is not listed on IDEAS
    11. Jannett Highfill & Michael McAsey, 2013. "Welfare Measures in Dynamic Firm R&D Games," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(4), pages 439-449, November.
    12. G. F. Gori & L. Lambertini, 2014. "Trade, externalities, and the impact of asymmetric information on trade policy," Working Papers wp930, Dipartimento Scienze Economiche, Universita' di Bologna.
    13. Jannett Highfill & Michael McAsey, 2013. "Dynamic Firm R&D Games: Manufacturing Costs and Reliability Paths," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 1-14, February.
    14. repec:wsi:igtrxx:v:11:y:2009:i:01:n:s0219198909002157 is not listed on IDEAS
    15. Roberto Cellini & Luigi Siciliani & Odd Rune Straume, "undated". "A dynamic model of quality competition with endogenous prices," NIPE Working Papers 8/2015, NIPE - Universidade do Minho.
    16. Samano, Mario & Santugini, Marc & Zaccour, Georges, 2017. "Dynamics in research joint ventures and R&D collaborations," Journal of Economic Dynamics and Control, Elsevier, vol. 77(C), pages 70-92.
    17. Jeroen Hinloopen & Grega Smrkolj & Florian Wagener, 2016. "R&D Cooperatives and Market Collusion: A Global Dynamic Approach," Tinbergen Institute Discussion Papers 16-048/II, Tinbergen Institute.
    18. Roberto Cellini & Luca Lambertini, 2011. "R&D Incentives Under Bertrand Competition: A Differential Game," The Japanese Economic Review, Japanese Economic Association, pages 387-400.
    19. R. Cellini & L. Lambertini, 2004. "R&D Incentives and Market Structure: A Dynamic Analysis," Working Papers 497, Dipartimento Scienze Economiche, Universita' di Bologna.
    20. D. Dragone & L. Lambertini & G. Leitmann & A. Palestini, 2008. "Hamiltonian potential functions for differential games," Working Papers 644, Dipartimento Scienze Economiche, Universita' di Bologna.
    21. Luca Lambertini & Gianpaolo Rossini, 2009. "The Gains From Cooperative R&D With A Concave Technology And Spillovers," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 77-85.
    22. repec:nip:nipewp:08/2015 is not listed on IDEAS
    23. Dawid, Herbert & Keoula, Michel Y. & Kopel, Michael & Kort, Peter M., 2015. "Product innovation incentives by an incumbent firm: A dynamic analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 411-438.
    24. Li, Shoude & Ni, Jian, 2016. "A dynamic analysis of investment in process and product innovation with learning-by-doing," Economics Letters, Elsevier, vol. 145(C), pages 104-108.

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