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Process R&D investment and social dilemmas

Author

Listed:
  • Michal Ramsza

    (SGH Warsaw School of Economics)

  • Adam Karbowski

    (SGH Warsaw School of Economics)

  • Tadeusz Platkowski

    (University of Warsaw)

Abstract

We consider a coopetitive game model of firms’ behavior in process R&D with entry cost. We compare the competitive behavior of firms in R&D with the R&D coopetition scenario. In R&D coopetition, firms engage in a bargaining process to reach a binding R&D agreement. We find that R&D competition can lead to a prisoner’s dilemma or a chicken game between market rivals. The possibility of entering a binding R&D agreement resolves the above social dilemmas associated with the firms’ competitive behavior. In turn, under R&D coopetition, for a medium level of R&D entry cost, firms may enter a trust dilemma, but it is a beneficial scenario in comparison with the corresponding R&D competition outcome.

Suggested Citation

  • Michal Ramsza & Adam Karbowski & Tadeusz Platkowski, 2021. "Process R&D investment and social dilemmas," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(3), pages 315-336, September.
    • Handle: RePEc:spr:epolin:v:48:y:2021:i:3:d:10.1007_s40812-021-00186-x
    DOI: 10.1007/s40812-021-00186-x
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    References listed on IDEAS

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    Cited by:

    1. Qing He & Yaqin Liu & Qian Yu & Chao Wei, 2022. "Risk Dominance Analysis of R&D Investment Cooperation in Dynamic Option Game," Sustainability, MDPI, vol. 15(1), pages 1-21, December.

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    More about this item

    Keywords

    R&D investment; Bargaining; Competition; Coopetition; Social dilemmas;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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