Cooperation vs. competition in R&D: The role of stability of equilibrium

Publication Type:
Journal Article
Journal of Economics/ Zeitschrift fur Nationalokonomie, 1998, 67 (1), pp. 63 - 73
Issue Date:
Filename Description Size
Thumbnail2010005904OK.pdf507.74 kB
Adobe PDF
Full metadata record
We consider a model in which firms first choose process R&D expenditures and then compete in an output market. We show the symmetric equilibrium under R&D competition is sometimes unstable, in which case two asymmetric equilibria must also exist. For the latter, we find, in contrast to the literature that total profits are sometimes higher with R&D competition than with research joint venture cartelization (due to the cost asymmetry of the resulting duopoly in the noncooperative case). Furthermore, these equilibria provide another instance of R&D-induced firm heterogeneity.
Please use this identifier to cite or link to this item: