Cooperation vs. competition in R&D: The role of stability of equilibrium

Rabah Amir, John Wooders

Research output: Contribution to journalArticle

Abstract

We consider a model in which firms first choose process R&D expenditures and then compete in an output market. We show the symmetric equilibrium under R&D competition is sometimes unstable, in which case two asymmetric equilibria must also exist. For the latter, we find, in contrast to the literature that total profits are sometimes higher with R&D competition than with research joint venture cartelization (due to the cost asymmetry of the resulting duopoly in the noncooperative case). Furthermore, these equilibria provide another instance of R&D-induced firm heterogeneity.

Original languageEnglish (US)
Pages (from-to)63-73
Number of pages11
JournalJournal of Economics/ Zeitschrift fur Nationalokonomie
Volume67
Issue number1
DOIs
StatePublished - 1998

Keywords

  • Research joint venture
  • Strategic R&D
  • Unstable equilibrium

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics

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