A duopoly experiment on cooperative and noncooperative r&d

No 77, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: In this paper an experimental environment to test theoretical predictions concerning R&D behavior of firms in duopoly with allowance for R&D spillovers is created. The design and hypotheses of the experiment are based on the well-known model of d Aspremont and Jacquemin in which R&D behavior of firms either competing or cooperating in R&D, is calculated. No di.erence in behavior between di.erent spillover levels is found. Further, I find that irrespective of the technological spillover level subjects do not always commit to an R&D contract but if they commit to an R&D level in a binding contract, cooperative R&D levels are chosen. When subjects do not or cannot commit to a contract, the subgame perfect Nash equilibrium performs well in predicting R&D decisions.

JEL-codes: C90 L13 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-ind
Date: Written 2003
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