 Persistence of monopoly, innovation, and R&D spilloversEugen Kovac and Kresimir Zigic () Research in Economics, 2016, vol. 70, issue 4, 714-734 Abstract: We build a dynamic duopoly model that accounts for the empirical observation of monopoly persistence in the long run. More specifically, we analyze the conditions under which it is optimal for the market leader to undertake pre-emptive R&D investment (“strategic predation” strategy) that eventually leads to exit of the follower firm. The follower is assumed to benefit from innovative activities of the leader through R&D spillovers. We show that strategic predation becomes an attractive strategy to embrace when the efficiency of R&D is high enough and when R&D spillovers are not large. The steady-state values of R&D investment in a dynamic model can be interpreted as the generalized values of the equilibrium values obtained in the corresponding static model. Finally, a distinct implication of our dynamic set-up is that it provides an explanation for the puzzling empirical findings, namely the presence of both negative (or not significant) and positive R&D spillovers from FDI in transition and emerging economies. Keywords: Dynamic duopoly; R&D spillovers; Persistence of monopoly; Strategic predation; Accommodation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:70:y:2016:i:4:p:714-734 DOI: 10.1016/j.rie.2016.07.006 Access Statistics for this article Research in Economics is currently edited by Federico Etro More articles in Research in Economics from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.