On the prisoner's dilemma in Ramp;D with input spillovers and incentives for Ramp;D cooperation

C. Burr, M. Knauff, A. Stepanova

Research output: Contribution to journalArticle

9 Citations (Scopus)
14 Downloads (Pure)

Abstract

This paper considers a standard model of strategic R&D with spillovers in R&D inputs, and extends the result that duopoly firms engaged in a standard two-stage game of R&D and Cournot competition end up in a prisoner’s dilemma situation for their R&D decisions, whenever spillover effects and R&D costs are relatively low. In terms of social welfare, this prisoner’s dilemma always works to the advantage of both consumers and society. This result allows a novel and enlightening perspective on some issues of substantial interest in the innovation literature. In particular, the incentive firms face towards R&D cooperation in the form of an R&D cartel is shown to be maximal for the case of zero spillovers, which is when the prisoner’s dilemma has the largest scope.
Original languageEnglish
Pages (from-to)254-261
Number of pages8
JournalMathematical Social Sciences
Volume66
Issue number3
Publication statusPublished - 2013

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Spillover
Prisoners' dilemma
Incentives
Innovation
Cournot competition
Costs
Social welfare
Cartel
Two-stage game
Spillover effects
Duopoly

Bibliographical note

© 2017, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

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On the prisoner's dilemma in Ramp;D with input spillovers and incentives for Ramp;D cooperation. / Burr, C.; Knauff, M.; Stepanova, A.

In: Mathematical Social Sciences, Vol. 66, No. 3, 2013, p. 254-261.

Research output: Contribution to journalArticle

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