Endogenous R&D symmetry in linear duopoly with one-way spillovers

Tesoriere A

No 2005037, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: In a linear model of cost reducing R&D/Cournot competition, firm assymetry is shown to be sustainable as subgame perfect Nash equilibrium with R&D competition only if the productivity of research is sufficiently large realtive to the benefits from imitation. In such a case, industry-wide cost reduction and firms assymetry are increasing and decreasing functions of the spillover rate, respectively. In the absence of spillovers, a symmetric joint lab generates higher consumer surplus and social welfare than a pari of assymmetric competitors. If spillovers are not too small, asymmetric R&D competition is advantageous to consumers, but not to firms

Keywords: Endogenous asymmetry; Cournot instability; R&D cooperation (search for similar items in EconPapers)
JEL-codes: C72 L13 O32 (search for similar items in EconPapers)
Date: 2005-10-01
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvec:2005037

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