R&D investments and spillovers under endogenous technological opportunity

Mário Alexandre Patrício Martins da Silva ()
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Mário Alexandre Patrício Martins da Silva: Faculdade de Economia do Porto

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: In this paper, we focus on endogenous technological opportunity and its effects upon R&D outcomes in the independent and cooperative cases. In light of the importance of spillovers in economic analysis of R&D incentives, we examine the relationship between R&D appropriability and R&D investment in the presence of an endogenous technological opportunity. In order to do this, we develop a three-stage game in which firms first choose their R&D orientations, then how much to invest in R&D, and finally their Cournot outputs. Contrary to the usual assumption made in oligopoly models that technological opportunity is external to the industry where firms operate, we fully endogenize technological possibilities through the firms’ choices of their R&D approaches. We find that competing firms invest more in R&D as spillovers increase (and R&D appropriability diminishes) but still less than cooperating firms no matter the degree of exogenous spillovers. This is a reversal of well-known results established in the literature on R&D and spillovers.

Keywords: Technological opportunity; R&D spillovers; R&D investment; absorptive capacity (search for similar items in EconPapers)
JEL-codes: O30 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2016-02
New Economics Papers: this item is included in nep-com, nep-cse, nep-ene, nep-ino and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:571

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