R&D Strategy in International Mixed Duopoly with Research Spillovers

16 Pages Posted: 23 Jun 2015

See all articles by Shoji Haruna

Shoji Haruna

Okayama University

Rajeev K. Goel

Illinois State University - Department of Economics

Date Written: June 2015

Abstract

This paper examines the international mixed duopoly behaviour with research spillovers. Using a two‐stage game with Research and Development (R&D) and output, we investigate the effects of imperfectly appropriable R&D on optimal R&D strategies of a domestic public firm and a foreign private firm across different market interactions: (i) international R&D competition, (ii) only the foreign firm conducts R&D, (iii) only the domestic public firm conducts R&D, (iv) no firm conducts R&D, and (v) research joint venture. The results show that firms' research performances are determined by the degree of spillovers and the optimal R&D strategies involve R&D competition. Spillovers are shown to be socially beneficial and their absence can prove to be a strategic deterrent, with the public firm monopolising the market. Some of these findings contrast with the traditional models of oligopoly (with or without R&D) and mixed oligopoly (without R&D).

JEL Classification: O33, L22, F19

Suggested Citation

Haruna, Shoji and Goel, Rajeev K., R&D Strategy in International Mixed Duopoly with Research Spillovers (June 2015). Australian Economic Papers, Vol. 54, Issue 2, pp. 88-103, 2015. Available at SSRN: https://ssrn.com/abstract=2621823 or http://dx.doi.org/10.1111/1467-8454.12042

Shoji Haruna (Contact Author)

Okayama University ( email )

1-1-1 Tsushimanaka, Kita Ward
Okayama, 700-0082
Japan

Rajeev K. Goel

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

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