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Spillovers and R&D Incentive under Incomplete Information

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  • Chatterjee, Rittwik
  • Chattopadhyay, Srobonti
  • Kabiraj, Tarun

Abstract

Spillovers of R&D outcome affect the R&D decision of a firm. The present paper discusses the R&D incentives of a firm when the extent of R&D spillover is private information to each firm. We construct a two stage game involving two firms when the firms first decide simultaneously whether to invest in R&D or not, then they compete in quantity. Assuming general distribution function of firm types we compare R&D incentives of firms under alternative scenarios based on different informational structures. The paper shows that while R&D spillovers reduce R&D incentives under complete information unambiguously, however, it can be larger under incomplete information.

Suggested Citation

  • Chatterjee, Rittwik & Chattopadhyay, Srobonti & Kabiraj, Tarun, 2018. "Spillovers and R&D Incentive under Incomplete Information," MPRA Paper 85089, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:85089
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    References listed on IDEAS

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    Cited by:

    1. Srobonti Chattopadhyay & Rittwik Chatterjee, 2019. "Patent Protection and R&D Incentives Under Incomplete Information," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(3), pages 699-705, September.
    2. Rittwik Chatterjee & Srobonti Chattopadhyay & Tarun Kabiraj, 2019. "When Spillovers Enhance R&D Incentives," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(4), pages 857-868, December.

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    More about this item

    Keywords

    R&D incentives; Cournot duopoly; Spillovers; Incomplete information;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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