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Spillovers and R&D Incentive under Incomplete Information

Rittwik Chatterjee, Srobonti Chattopadhyay and Tarun Kabiraj

Studies in Microeconomics, 2018, vol. 6, issue 1-2, 50-65

Abstract: Abstract Spillovers of R&D outcome affect the R&D decision of a firm. The present paper discusses the R&D incentives of a firm when the extent of R&D spillover is private information to each firm. We construct a two-stage game involving two firms when the firms first decide simultaneously whether to invest in R&D or not, then they compete in quantity. Assuming general distribution function of firm types we compare R&D incentives of firms under alternative scenarios based on different informational structures. The paper shows that while R&D spillovers reduce R&D incentives under complete information unambiguously, however, it can be larger under incomplete information. JEL Classification: D43, D82, L13, O31

Keywords: R&D incentives; Cournot duopoly; Spillovers; incomplete information (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:sae:miceco:v:6:y:2018:i:1-2:p:50-65

DOI: 10.1177/2321022218800183

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