A Test of Perpetual R&D Races

Yves Brejtmoser, Jonathan Tan and Daniel Zizzo
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Yves Brejtmoser: Institute of Microeconomics, European University Viadrina

No 2006-11, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: This paper presents an experimental study of dynamic indefinite horizon R&D races with uncertainty and multiple prizes. The theoretical predictions are highly sensitive: small parameter changes determine whether technological competition is sustained over time or converges into a market structure with an entrenched leadership and lower aggregate R&D research. The subjects' strategies are far less sensitive. In three out of four treatments (with the exception being a control treatment), the R&D races tend to converge to entrenched leadership. Investment is highest when rivals are close, and there is evidence of average over-investment.

Keywords: R&D race; innovation; dynamics; experiment. (search for similar items in EconPapers)
JEL-codes: C72 C91 O31 (search for similar items in EconPapers)
Date: 2006-07-01
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Citations: View citations in EconPapers (1)

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Working Paper: A Test of Perpetual R&D Races (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:uea:ueaccp:2006_11

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