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Pre-emptive Search and R&D Clustering

Author

Listed:
  • James H. Cardon

    (Brigham Young University, Provo, Utah)

  • Dan Sasaki

    (Institute of Economics, University of Copenhagen)

Abstract

While many preceding studies on R&D discuss the equilibrium amount and speed of the R&D investment, this paper focuses on its equilibrium direction. Under a broad class of parametric conditions, there is a pure-strategy equilibrium in which multiple firms "cluster", i.e. search for the same potential project even if [i] potential projects are ex ante homogeneous, [ii] firms have negative, not positive, externalities toward each other in that a potential project can be made into a profit-making patent by no more than one firm, and [iii] firms have simultaneous moves so that there is no informational spillover between them. Economic applications of this "clustering" equilibrium result are not confined to the R&D investment. Any situation where agents are racing in search of economic opportunities can be an example of this model.

Suggested Citation

  • James H. Cardon & Dan Sasaki, 1996. "Pre-emptive Search and R&D Clustering," Discussion Papers 96-21, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:9621
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    Cited by:

    1. Jay Pil Choi & Heiko Gerlach, 2014. "Selection Biases in Complementary R&D Projects," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(4), pages 899-924, December.
    2. Andreas Fier & Dietmar Harhoff, 2002. "Die Evolution der bundesdeutschen Forschungs- und Technologiepolitik: Rückblick und Bestandsaufnahme," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 3(3), pages 279-301, August.
    3. Luca Lambertini & Piero Tedeschi, 2007. "On the Social Desirability of Patents for Sequential Innovations in a Vertically Differentiated Market," Journal of Economics, Springer, vol. 90(2), pages 193-214, March.
    4. Konrad, Kai A., 2014. "Search duplication in research and design spaces — Exploring the role of local competition," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 222-228.
    5. Oikawa, Koki & Managi, Shunsuke, 2015. "R&D in clean technology: A project choice model with learning," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 175-195.
    6. Nisvan Erkal & Deborah Minehart, 2007. "Optimal Sharing Strategies in Dynamic Games of Research and Development," EAG Discussions Papers 200707, Department of Justice, Antitrust Division.
    7. Francesco Squintani & Hugo A. Hopenhayn, 2016. "On the Direction of Innovation," 2016 Meeting Papers 1357, Society for Economic Dynamics.
    8. Gerlach, Heiko A. & Rønde, Thomas & Stahl, Konrad, 2002. "Market and Technical Risk in R&D," CEPR Discussion Papers 3450, C.E.P.R. Discussion Papers.
    9. Ishibashi, Ikuo & Matsumura, Toshihiro, 2006. "R&D competition between public and private sectors," European Economic Review, Elsevier, vol. 50(6), pages 1347-1366, August.

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