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Sequencing R&D Decisions in a Two-period Duopoly with Spillovers

Author

Listed:
  • Madjid Amir

    (University of Kalsruhe)

  • Rabah Amir

    (University of Southern Denmark)

  • Jim Jin

    (The Queen's University of Belfast)

Abstract

We compare simultaneous versus sequential moves in R&D decisions within an asymmetric R&D/Cournot model with linear demand (for differentiated products), general R&D costs, and spillovers. Simultaneous play and sequential play (with and without a specified leader) can emerge as appropriate formulations, depending on the ratios of spillover rate over demand cross-slope, but not on R&D efficiency. When at least one ratio is above ½, a sequential solution mitigates competition and leads to higher profits for each firm, and to higher social welfare. When uniquely specified, the stronger firm emerges as the R&D first-mover.

Suggested Citation

  • Madjid Amir & Rabah Amir & Jim Jin, 1999. "Sequencing R&D Decisions in a Two-period Duopoly with Spillovers," CIE Discussion Papers 1999-06, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    • Handle: RePEc:kud:kuieci:1999-06
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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