Innovation Strategies in a Competitive Dynamic Setting
This paper presents a dynamic model of a competitive R&D and production duopoly subject to knowledge spillovers. Two asymmetric firms operate for a limited period of time and dispose their knowledge capital in the end. Both firms and the social planner prefer the R&D-cooperative strategy over the competitive one regardless of the intensity of knowledge spillovers. Accumulation of knowledge capital results allows the monopolist to have lower marginal cost of production and charge a lower market price than a fully competitive duopoly. Being able to define the degree of knowledge exchange when creating a research joint venture, the firms do not necessary choose the highest degree of cooperation available.
|Date of creation:||2005|
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97-06, Michigan - Center for Research on Economic & Social Theory.
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356, Australian National University - Department of Economics.
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CORE Discussion Papers RP
1650, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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