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The disclosure decision game: Subsidies and incentives for R&D activity

Author

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  • Buccella, Domenico
  • Fanti, Luciano
  • Gori, Luca

Abstract

This article presents a three-stage non-cooperative disclosure decision game (DDG), in which R&D-investing firms choose whether to disclose R&D-related information to the rival in a Cournot-like environment. Though firms have no (private) incentive to disclose information unilaterally on their cost-reducing R&D activity to prevent a rival from engaging in free appropriation, this work reveals opportunity for the government to design an optimal policy aimed at incentivising R&D disclosure. Following this welfare-improving path, sharing R&D-related information becomes a Pareto-efficient Nash equilibrium strategy. These findings suggest that using public subsidies to R&D disclosure can lead to a win-win result, eliminating the unpleasant non-disclosing outcome from a societal perspective.

Suggested Citation

  • Buccella, Domenico & Fanti, Luciano & Gori, Luca, 2023. "The disclosure decision game: Subsidies and incentives for R&D activity," Mathematical Social Sciences, Elsevier, vol. 125(C), pages 11-26.
    • Handle: RePEc:eee:matsoc:v:125:y:2023:i:c:p:11-26
    DOI: 10.1016/j.mathsocsci.2023.06.002
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    2. Jiaqi Chen & Doori Kim & Sang‐Ho Lee, 2024. "Endogenous timing of R&D decisions with spillovers: Output versus research subsidies," Bulletin of Economic Research, Wiley Blackwell, vol. 76(3), pages 631-649, July.

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