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Research among Copycats: R&D, Spillovers, and Feedback Strategies

Lookup NU author(s): Dr Grega SmrkoljORCiD

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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND).

Abstract

We study a stochastic dynamic game of process innovation in which firms can initiate and terminate R&D efforts and production at different times. We discern the impact of knowledge spillovers on the investments in existing markets, as well as on the likely structure of newly forming markets, for all possible asymmetries in production costs between firms. While an increase in spillovers may improve the likelihood of a competitive market, it may at the same time reduce the level to which a technology is developed. We show that the effects of spillovers on investments and surpluses crucially depend on the stage of technology development considered. In particular, we show that high spillovers are not necessarily pro-competitive as they can make it harder for the laggard to catch up with the technology leader.

Publication metadata

Author(s): Smrkolj G, Wagener FOO

Publication type: Article

Publication status: Published

Journal: International Journal of Industrial Organization

Year: 2019

Volume: 65

Pages: 82-120

Print publication date: 01/07/2019

Online publication date: 06/03/2019

Acceptance date: 28/02/2019

Date deposited: 03/03/2019

ISSN (print): 0167-7187

Publisher: Elsevier BV

URL: https://doi.org/10.1016/j.ijindorg.2019.02.002

DOI: 10.1016/j.ijindorg.2019.02.002

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