Spillover feedback loops and strategic complements in R&D
Journal of Public Economic Theory, 2019, vol. 21, issue 6, 1126-1142
This paper studies, in a two‐period model, the effects of knowledge spillovers among product market competitors on R&D levels. It argues that when firms' R&D decisions are strategic complements, in industries in which spillovers increase the marginal productivity of a firm's R&D, both incoming and outgoing spillovers spur R&D in equilibrium. Outgoing spillovers can foster innovation even in a homogeneous‐product industry. In these industries, the intellectual property law should be such that facilitates knowledge diffusion. If firms have power in deciding the level of knowledge spillovers, we show that a firm will choose to disclose its knowledge to its product market competitors.
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:21:y:2019:i:6:p:1126-1142
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Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders
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