On a Dynamic Model of Cooperative and Noncooperative R and D in Oligopoly with Spillovers

Shinji Kobayashi ()

Dynamic Games and Applications, 2015, vol. 5, issue 4, 599-619

Abstract: We developed a dynamic model of oligopoly in which firms’ R and D investments accumulate as R and D capital and have spillover effects. We showed that there exists a symmetric stable open-loop Nash equilibrium for each of the differential games under noncooperative R and D and cooperative R and D. We then showed that for small spillovers, each firm’s R and D investments are larger under R and D competition than under R and D cooperation. We further demonstrated that, in the limit, when the discount rate goes to zero, the stability condition for our dynamic game approaches the stability condition for the static two-stage game in d’Aspremont and Jacquemin (Am Econ Rev 78:1133–1137, 1988 ). However, we also showed that at the Markov perfect equilibrium, cooperative R and D investments are larger than noncooperative investments for all possible values of spillovers. Copyright Springer Science+Business Media New York 2015

Keywords: R and D; Spillovers; Differential games; Stability (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s13235-014-0117-z

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