Asymmetric Races of Research and Development

Flavio Delbono and V. Denicolo'
Authors registered in the RePEc Author Service: Vincenzo Denicolo' ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: In this paper we study a one-shot game of R&D between two price-setting firms that are asymmetrically placed as they produce at different cost levels. First we prove the existence and the properties of a noncooperative equilibrium. Then, we show that the higher (lower) the discount rate, the lower (higher) the probability of innovating of the current leader. In a specialised version of the model we establish the effect of the productivity of R&D espenditure, initial cost gap, and market size on the expected identity of the winner of the patent race.

Date: 1988-07
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:51

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