Sequencing R&D decisions in a two-period duopoly with spillovers

Jim Jin (), Rabah Amir () and Madjid Amir
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Madjid Amir: Department of Statistics and Operations Research, King Saud University, P.O.Box 2455, Riyadh 11451, SAUDI ARABIA

Economic Theory, 2000, vol. 15, issue 2, 297-317

Abstract: We compare simultaneous versus sequential moves in R&D decisions within an asymmetric R&D/Cournot model with linear demand (for differentiated products), general R&D costs, and spillovers. Simultaneous play and sequential play (with and without a specified leader) can emerge as appropriate formulations, depending on the ratios of spillover rate over demand cross-slope, but not on R&D efficiency. When at least one ratio is above 1/2, a sequential solution mitigates competition and leads to higher profits for each firm, and to higher social welfare. When uniquely specified, the stronger firm emerges as the R&D first-mover.

Keywords: R&D spillovers; Cournot duopoly; Subgame-perfect Equilibrium; Endogenous timing. (search for similar items in EconPapers)
JEL-codes: C72 L13 O30 (search for similar items in EconPapers)
Date: 2000-02-21
Note: Received: December 8, 1997; revised version: October 25, 1998
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Citations: View citations in EconPapers (28)

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Working Paper: Sequencing R&D Decisions in a Two-period Duopoly with Spillovers (1999)
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