Competition and private R&D investment

Thomas Grebel and Lionel Nesta

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Abstract: We investigate the determinants of the sign of Research and Development reaction functions of rival firms. Using a two-stage n-firm 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 thoroughly corroborate the validity of the theoretical model.

Date: 2020-05-27
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-gth, nep-ino, nep-sbm and nep-tid
Note: View the original document on HAL open archive server: https://hal.science/hal-03042941
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Published in PLoS ONE, 2020, 15, ⟨10.1371/journal.pone.0232119⟩

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Journal Article: Competition and private R&D investment (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03042941

DOI: 10.1371/journal.pone.0232119

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