Innovation Races with the Possibility of Failure

Subhasish Chowdhury and Stephen Martin ()

No 1106, Working Papers from University of Otago, Department of Economics

Abstract: The standard innovation race specification assumes a memoryless exponential distribution for the time to success of an R&D project. This specification implies that a project succeeds, eventually, with probability one. We introduce a positive probability that an R&D project fails. With this modified specification, we compare the non-cooperative and cooperative R&D in terms of innovation effort, consumer surplus, and net social welfare.

Keywords: innovation; research & development; R&D joint ventures; parallel research projects. (search for similar items in EconPapers)
JEL-codes: L13 O31 O38 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2011-08, Revised 2011-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Innovation Races with the Possibility of Failure (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:otg:wpaper:1106

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