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 language | English |
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Pages (from-to) | 297-318 |
Number of pages | 21 |
Journal | Economic Theory |
Volume | 15 |
Publication status | Published - Mar 2000 |
Keywords
- R&D spillovers
- Cournot duopoly
- subgame-perfect equilibrium
- endogenous timing
- GAMES
- COMMITMENT
- OLIGOPOLY