Sequencing R&D Decisions in a Two-Period Duopoly with Spillovers
Research output: Contribution to journal › Journal article › Research › peer-review
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 1/2, 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
Original language | English |
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Journal | Economic Theory |
Volume | 15 |
Issue number | 2 |
Pages (from-to) | 297-317 |
ISSN | 0938-2259 |
DOIs | |
Publication status | Published - 2000 |
ID: 148627