Sequencing R&D Decisions in a Two-Period Duopoly with Spillovers

Jim Yongtao Jin, M Amir, R Amir

    Research output: Contribution to journalArticlepeer-review

    27 Citations (Scopus)

    Abstract

    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 languageEnglish
    Pages (from-to)297-318
    Number of pages21
    JournalEconomic Theory
    Volume15
    Publication statusPublished - Mar 2000

    Keywords

    • R&D spillovers
    • Cournot duopoly
    • subgame-perfect equilibrium
    • endogenous timing
    • GAMES
    • COMMITMENT
    • OLIGOPOLY

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