Understanding Perpetual R&D Races
This paper presents an experimental study of dynamic indefinite horizon R and D races with uncertainty and multiple prizes. The theoretical predictions are highly sensitive: small parameter changes determine whether technological competition is sustained, or converges into a market structure with an entrenched leadership and lower aggregate R&D. The subjects' strategies are far less sensitive. In most treatments the R&D races tend to converge to entrenched leadership. Investment is highest when rivals are close. This stylized fact, and so the usefulness of neck-to-neck competition in general, is largely unrelated to rivalry concerns but can be explained using a quantal response extension of Markov perfection.
|Date of creation:||Mar 2008|
|Contact details of provider:|| Postal: Norwich, NR4 7TJ|
Phone: +44(0)1603 593715
Fax: +44(0)1603 591622
Web page: http://www.ccp.uea.ac.uk
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Reinhard Selten, 1998.
"Axiomatic Characterization of the Quadratic Scoring Rule,"
Springer;Economic Science Association, vol. 1(1), pages 43-61, June.
- Selten, Reinhard, 1996. "Axiomatic Characterization of the Quadratic Scoring Rule," Discussion Paper Serie B 390, University of Bonn, Germany.
- Aoki, Reiko, 1991. "R&D Competition for Product Innovation: An Endless Race," American Economic Review, American Economic Association, vol. 81(2), pages 252-256, May.
- Rebecca Henderson & Iain Cockburn, 1996.
"Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery,"
RAND Journal of Economics,
The RAND Corporation, vol. 27(1), pages 32-59, Spring.
- Rebecca Henderson & Iain Cockburn, "undated". "Scale, Scope and Spillovers: The Determinants of Research Productivity in Drug Discovery," Working Papers ec25/94, Department of Economics, University of Lancaster.
- Marco Battaglini & Thomas Palfrey, 2007.
"The Dynamics of Distributive Politics,"
1451, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- C. Monica Capra, 1999. "Anomalous Behavior in a Traveler's Dilemma?," American Economic Review, American Economic Association, vol. 89(3), pages 678-690, June.
- Reinganum, Jennifer R., 1982.
"Uncertain Innovation and the Persistence of Monopoly,"
431, California Institute of Technology, Division of the Humanities and Social Sciences.
- Reinganum, Jennifer F, 1983. "Uncertain Innovation and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 73(4), pages 741-748, September.
- Cockburn, Iain & Henderson, Rebecca, 1994.
"Racing to Invest? The Dynamics of Competition in Ethical Drug Discovery,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 3(3), pages 481-519, Fall.
- Cockburn, Iain. & Henderson, Iain., 1994. "Racing to invest? : the dynamics of competition in ethical drug discovery," Working papers 3710-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Dimitrios Voliotis, 2006. "Strategic market games quantal response equilibria," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 27(2), pages 475-482, January.
- Dufwenberg, Martin & Gneezy, Uri & Goeree, Jacob K. & Nagel, Rosemarie, 2002.
"Price Floors and Competition,"
Research Papers in Economics
2002:13, Stockholm University, Department of Economics.
- Zizzo, D.J., 2001.
"Racing with Uncertainty: A Patent Race Experiment,"
Economics Series Working Papers
9968, University of Oxford, Department of Economics.
- Aghion, Philippe & Harris, Christopher & Vickers, John, 1997. "Competition and growth with step-by-step innovation: An example," European Economic Review, Elsevier, vol. 41(3-5), pages 771-782, April.
- Christopher Harris & John Vickers, 1987. "Racing with Uncertainty," Review of Economic Studies, Oxford University Press, vol. 54(1), pages 1-21.
- Turocy, Theodore L., 2005. "A dynamic homotopy interpretation of the logistic quantal response equilibrium correspondence," Games and Economic Behavior, Elsevier, vol. 51(2), pages 243-263, May.
- Yi, Kang-Oh, 2005. "Quantal-response equilibrium models of the ultimatum bargaining game," Games and Economic Behavior, Elsevier, vol. 51(2), pages 324-348, May.
- Mathijs Jansen & Dries Vermeulen, 2001. "On the computation of stable sets and strictly perfect equilibria," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 17(2), pages 325-344.
- Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-526, June.
- R. Cookson, 2000. "Framing Effects in Public Goods Experiments," Experimental Economics, Springer;Economic Science Association, vol. 3(1), pages 55-79, June.
- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, September.
- Yves Breitmoser & Jonathan H. W. Tan & Daniel John Zizzo, 2006. "A Test of Perpetual R&D Races," Working Papers 06-11, Centre for Competition Policy, University of East Anglia.
When requesting a correction, please mention this item's handle: RePEc:ccp:wpaper:wp08-22. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cheryl Whittkaer)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.