When Spillovers Enhance R&D Incentives

Rittwik Chatterjee (), Srobonti Chattopadhyay () and Tarun Kabiraj ()
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Rittwik Chatterjee: Centre for Studies in Social Sciences
Srobonti Chattopadhyay: Vidyasagar College for Women
Tarun Kabiraj: Indian Statistical Institute

Journal of Quantitative Economics, 2019, vol. 17, issue 4, No 8, 857-868

Abstract: Abstract It is commonly believed that spillover reduces R&D incentives of a firm. This happens because of the appropriability problem. However, some empirical literature shows the possibility of enhanced R&D incentives under spillovers. In the literature this is explained under incomplete information, but we show this theoretically under complete information. We show in particular that in a duopoly there are situations when with no spillovers only one firm invests in R&D, but under spillovers both the firms invest. This occurs when there is complementarity in research and the spillover rate lies in an interval specified by the size of R&D investment.

Keywords: R&D spillovers; Appropriability problem; Complete information; R&D incentives; D43; L13; O31 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s40953-019-00161-3

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