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The disclosure decision game: Subsidies and incentives for R&D activity

Domenico Buccella, Luciano Fanti and Luca Gori (luca.gori@unipi.it)

Mathematical Social Sciences, 2023, vol. 125, issue C, 11-26

Abstract: This article presents a three-stage non-cooperative disclosure decision game (DDG), in which R&D-investing firms choose whether to disclose R&D-related information to the rival in a Cournot-like environment. Though firms have no (private) incentive to disclose information unilaterally on their cost-reducing R&D activity to prevent a rival from engaging in free appropriation, this work reveals opportunity for the government to design an optimal policy aimed at incentivising R&D disclosure. Following this welfare-improving path, sharing R&D-related information becomes a Pareto-efficient Nash equilibrium strategy. These findings suggest that using public subsidies to R&D disclosure can lead to a win-win result, eliminating the unpleasant non-disclosing outcome from a societal perspective.

Keywords: Cost-reducing innovation; Nash equilibrium; Government; Social welfare (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:125:y:2023:i:c:p:11-26

DOI: 10.1016/j.mathsocsci.2023.06.002

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