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Open Innovation in a dynamic cournot duopoly


  • Hasnas, Irina
  • Lambertini, Luca
  • Palestini, Arsen


In recent years Open Innovation (OI) processes have been receiving growing attention from the empirical and theoretical economic literature, where a debate is taking place on the aspects of complementarity or substitutability between internal R&D and OI spillover. By means of a differential game approach, we analyze the case of substitutability in an OI setup in a Cournot duopoly where knowledge spillovers are endogenously determined via the R&D process. The game produces multiple steady states, allowing for an asymmetric solution where a firm may trade off the R&D investment against information absorption from the rival. The technical analysis and the numerical simulations point out that the firm which commits to a higher level of OI absorption produces a smaller output and enjoys higher profits than its rival.

Suggested Citation

  • Hasnas, Irina & Lambertini, Luca & Palestini, Arsen, 2013. "Open Innovation in a dynamic cournot duopoly," DICE Discussion Papers 111, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:111

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    References listed on IDEAS

    1. André Spithoven & Peter Teirlinck & Dirk Frantzen, 2012. "Managing Open Innovation," Books, Edward Elgar Publishing, number 14723.
    2. Dahlander, Linus & Gann, David M., 2010. "How open is innovation?," Research Policy, Elsevier, vol. 39(6), pages 699-709, July.
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    6. Dirk Czarnitzki & Kornelius Kraft, 2012. "Spillovers of innovation activities and their profitability," Oxford Economic Papers, Oxford University Press, vol. 64(2), pages 302-322, April.
    7. Cellini, Roberto & Lambertini, Luca, 2009. "Dynamic R&D with spillovers: Competition vs cooperation," Journal of Economic Dynamics and Control, Elsevier, vol. 33(3), pages 568-582, March.
    8. Piercarlo Zanchettin, 2006. "Differentiated Duopoly with Asymmetric Costs," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(4), pages 999-1015, December.
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    13. Modica Salvatore, 2012. "Open Source without Free-Riding," Economia politica, Società editrice il Mulino, issue 2, pages 247-260.
    14. Audretsch, D-B & Menkveld, A-J & Thurik, A-R, 1996. "The Decision Between Internal and External R&D," Papers 9603/e, NEUHUYS - RESEARCH INSTITUTE FOR SMALL AND MEDIUM.
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    1. repec:eee:eecrev:v:94:y:2017:i:c:p:221-239 is not listed on IDEAS
    2. repec:spr:joptap:v:170:y:2016:i:2:d:10.1007_s10957-016-0866-5 is not listed on IDEAS

    More about this item


    R&D; spillovers; dynamic games;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • 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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