Research among copycats: R&D, spillovers, and feedback strategies

Grega Smrkolj and Florian Wagener

International Journal of Industrial Organization, 2019, vol. 65, issue C, 82-120

Abstract: We study a stochastic dynamic game of process innovation in which firms can initiate and terminate R&D efforts and production at different times. We discern the impact of knowledge spillovers on the investments in existing markets, as well as on the likely structure of newly forming markets, for all possible asymmetries in production costs between firms. While an increase in spillovers may improve the likelihood of a competitive market, it may at the same time reduce the level to which a technology is developed. We show that the effects of spillovers on investments and surpluses crucially depend on the stage of technology development considered. In particular, we show that high spillovers are not necessarily pro-competitive as they can make it harder for the laggard to catch up with the technology leader.

Keywords: Process innovation; R&D; Spillovers; Differential game; Feedback Nash equilibrium (search for similar items in EconPapers)
JEL-codes: C63 C73 D43 D92 L13 O31 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Research among Copycats: R&D, Spillovers, and Feedback Strategies (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:65:y:2019:i:c:p:82-120

DOI: 10.1016/j.ijindorg.2019.02.002

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