Endogenous firm asymmetry and cooperative R&D in linear duopoly with spillovers
(2005)
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- Abstract
- In a linear model ofcost reducing R&D/Cournot competition, firm asymmetry is shown to be sustainable as subgame perfect Nash equilibrium with R&D competition only ifthe productivity of research is sufficiently large relative to the benefits from imitation. In such a case, industry-wide cost reduction and firms asymmetry are increasing and decreasing functions of the spillover rate, respectively. In the absence of spillovers, a symmetric joint lab generates higher consumer surplus and social welfare than a pair ofasymmetric competitors. If spillovers are not too small, asymmetric R&D competition is advantageous to consumers, but not to firms.
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Citations
Tesoriere, A. (2005). Endogenous firm asymmetry and cooperative R&D in linear duopoly with spillovers (CORE Discussion Papers 2005/86). https://hdl.handle.net/2078.5/35619