R&D in Duopoly with Spillovers: Evolution and Aspiration Learning

CERGE-EI Working Paper Series No. 140

38 Pages Posted: 17 Jan 2010

See all articles by Jacek Cukrowski

Jacek Cukrowski

CASE - Center for Social and Economic Research

Stepan Cabelka

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Date Written: December 1, 1998

Abstract

The paper applies the evolutionary concept to an analysis of the role of intellectual property rights protection in the model of two countries North and South (and two firms) where only the Northern firm conducts innovative activity. The concept of social evolution and learning in oligopolistic industries (an aspiration-based model) is developed and the general algorithm of social evolution and aspiration learning for asymmetric duopoly is presented. The evolutionary equilibrium in R&D duopoly with spillovers is presented and analyzed. The results show that strengthening intellectual property rights protection always has negative welfare effects. In particular, it decreases not only the profit (producer surplus) of both the Northern and the Southern firms, but also the consumer surplus in both countries, and, consequently, it lowers social welfare in both countries.

Keywords: Aspiration learning, social evolution, research and development, duopoly, spillovers.

JEL Classification: L11, L13, O31, O38

Suggested Citation

Cukrowski, Jacek and Cabelka, Stepan, R&D in Duopoly with Spillovers: Evolution and Aspiration Learning (December 1, 1998). CERGE-EI Working Paper Series No. 140. Available at SSRN: https://ssrn.com/abstract=1537048 or http://dx.doi.org/10.2139/ssrn.1537048

Jacek Cukrowski (Contact Author)

CASE - Center for Social and Economic Research ( email )

Center for Social and Economic Research,
Warsaw
Poland

Stepan Cabelka

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

Politickych veznu 7
Prague 1, 111 21
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

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