Technological Spillovers, Product Market Rivalry and R&D Investment

Thomas Grebel and Lionel Nesta

No 2017-34, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: We investigate the determinants of the sign of R&D reaction functions of two rival firms. Using a two-stage Cournot competition game, we show that this sign depends on four types of environments in terms of product rivalry and technology spillovers. We test the predictions of the model on the world's largest manufacturing corporations. Assuming that firms make R&D investments based on the R&D effort of the representative rival company, we develop a dynamic panel data model that accounts for the endogeneity of the decision of the rival firm. Empirical results corroborate the validity of the theoretical model.

Keywords: Process R&D; Spillovers; Product substitution; Reaction function; GMM (search for similar items in EconPapers)
JEL-codes: D43 L13 O31 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2017-11
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Technological Spillovers, Product Market Rivalry and R&D Investment (2018)
Working Paper: Technological Spillovers, Product Market Rivalry and R&D Investment (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2017-34

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