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Lookup NU author(s): Dr Grega SmrkoljORCiD
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND).
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.
Author(s): Smrkolj G, Wagener FOO
Publication type: Article
Publication status: Published
Journal: International Journal of Industrial Organization
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
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