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Sequencing R&D Decisions in a Two-Period Duopoly with Spillovers

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  • Madjid Amir
  • Rabah Amir
  • Jim Jin
We compare simultaneous versus sequential moves in R&D decisions within an asymmetric R&D/Cournot model with linear demand (for differentiated products), general R&D costs, and spillovers. Simultaneous play and sequential play (with and without a specified leader) can emerge as appropriate formulations, depending on the ratios of spillover rate over demand cross-slope, but not on R&D efficiency. When at least one ratio is above 1/2, a sequential solution mitigates competition and leads to higher profits for each firm, and to higher social welfare. When uniquely specified, the stronger firm emerges as the R&D first-mover
TidsskriftEconomic Theory
Udgave nummer2
Sider (fra-til)297-317
StatusUdgivet - 2000

Bibliografisk note

JEL Classification: O32, L13

ID: 148627