Abstract
This paper analyzes the impact of a future RandD race on current firm behavior in the product market. It is shown that, in order to “soften” rivals in the future RandD race, firms behave less aggressively in the pre-innovation product market than in the standard duopoly models. As a result, the RandD rates are lower than what firms would choose if standard duopoly outcomes are assumed. RandD cooperation is shown to be capable of restoring the duopoly outcome.
| Original language | English |
|---|---|
| Pages (from-to) | 105-111 |
| Number of pages | 7 |
| Journal | Economics Letters |
| Volume | 58 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 1 Jan 1998 |
Funding
sI would like to thank Ed Green, Preston McAfee, Kamal Saggi, Sang-Seung Yi, participants at the Southeastern Economic Theory and International Trade Conference, and a referee for valuable comments and suggestions on an early draft of the paper.
Keywords
- R and D rivalry
- product market competition