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Asymmetric spillovers and investments in research and development of leaders and followers
Tijdschriftbijdrage - Tijdschriftartikel
The focus of this paper is on the incentives of firms to invest in research and development (R&D) when sequential
moves are taken into account. Leading firms move before followers in investment and in output choices in a four stage game setting. Leaders may compete or cooperate in R&D with other leaders, given that followers compete. Followers
may compete or cooperate in R&D with other followers given that leaders compete. There may be spillovers between
leaders and between followers and also between these two groups of players. Due to the complexity of the model,
results are obtained by numerical simulations. The impact of symmetric spillovers is similar but not identical to the
tendencies in two stage models with simultaneous R&D moves. A relatively wide set of circumstances is identified
where followers tend to invest more than leaders. Critical spillover values are identified that drive the effects of
cooperation in R&D as is the case in simpler settings. Situations are detailed, where consumer surplus and static
welfare are best served by cooperation of followers rather than cooperation of leaders.
Tijdschrift: Economics of Innovation and New Technology
ISSN: 1043-8599
Issue: 5
Volume: 17
Pagina's: 417 - 433
Jaar van publicatie:2008
Toegankelijkheid:Closed