Disclosing versus Withholding Technology Knowledge in a Duopoly

16 Pages Posted: 23 Dec 2007

See all articles by Emanuele Bacchiega

Emanuele Bacchiega

University of Bologna - Department of Economics

Paolo G. Garella

University of Milan - Dipartimento di Scienze Economiche, Aziendali e Statistiche

Abstract

We study firms incentives to transfer knowledge about production technology to a rival in a Cournot duopoly. In a setting where two technologies are available, a technology is characterized by its associated cost function and no single technology is strictly superior to the other. A firm has superior information if it knows both techniques and the other only one. Cost efficiency may be reversed after the voluntary disclosure, so that the rival's costs are improved at the equilibrium level of output. Adding R&D investments to the picture, we find that a firm can decide to invest just for the purpose of acquiring knowledge that will be transferred and not used. Furthermore, for the same point in the parameter space, the acquisition of full knowledge may occur or not as a function of the initial distribution of information.

Suggested Citation

Bacchiega, Emanuele and Garella, Paolo G., Disclosing versus Withholding Technology Knowledge in a Duopoly. Manchester School, Vol. 76, Issue 1, pp. 88-103, January 2008. Available at SSRN: https://ssrn.com/abstract=1078169 or http://dx.doi.org/10.1111/j.1467-9957.2007.01051.x

Emanuele Bacchiega (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
40126 Bologna, 40125
Italy
+390512098486 (Phone)
+390512098493 (Fax)

Paolo G. Garella

University of Milan - Dipartimento di Scienze Economiche, Aziendali e Statistiche ( email )

via Conservatorio 7
Milano, 20122
Italy

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