Download This PaperEndogenous R&D Symmetry in Linear Duopoly with One-Way Spillovers
CORE Discussion Paper No. 2005/45
31 Pages Posted: 30 Jun 2006
Date Written: September 2005
Abstract
A duopoly model of cost reducing R&D-Cournot competition is extended to study the endogenous timing of R&D strategic investment. Under the assumption that R&D spillovers only flow from the R&D leader to the follower, sequential and simultaneous play at the R&D stage are compared, in order to assess the role of technological exter-nalities in stimulating or attenuating endogenous firm asymmetry. The only timing structure of the R&D stage sustainable as subgame-perfect Nash equilibrium involves simultaneous play and zero spillovers.
Keywords: Endogenous symmetry, Endogenous timing, Stackelberg equilibrium
JEL Classification: C72, D43, L11, L13
Suggested Citation: Suggested Citation
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