Title

Dynamic noncooperative R&D in duopoly with spillovers and technology gap

Date of this Version

1-1-2009

Document Type

Book Chapter

Publication Details

Interim status: Citation only.

Luckraz, S. (2009). Dynamic noncooperative R&D in duopoly with spillovers and technology gap. In J. H. Mathias (Ed.), Mathematics, Game Theory and Algebra, Compendium: Volume 1, (pp 335-359). New York: Nova Science Publishers, Inc. ISBN: 978-1-60456-659-8

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© Copyright Nova Science Publishers, Inc., 2009

This chapter is a reprint of an article published as Luckraz, S. (2006). Dynamic non-cooperative R&D in duopoly with spillovers and technology gap. International journal of mathematics, game theory and algebra, 15(3), 289-31.

ISBN

978-1-60456-659-8

Abstract

Extract:

The purpose of this paper is to show how the dynamics of the technology gap between firms helps demarcate the opposing effects of spillovers on R&D incentives. We explore the theoretical link between spillovers as pioneered by D’Aspremont and Jacquemin (1988) (henceforth AJ) and technology gap by allowing the rate of spillovers to depend on the latter². Intuitively, when the follower lags far behind the leader it enjoys larger spillovers and has fewer incentives to conduct its own R&D, but as it moves closer to the frontier³ it is "forced" to innovate as its free riding possibility set becomes smaller. Thus, if there exists a relationship between spillovers and R&D incentives an analogous link must also exist between the latter and the level of technology gap.

² ³ See notes in chapter.

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