Cooperative R&D with endogenous technology differentiation
Gil Molto, M. J., Georgantzis, N. and Orts, V. (2005) Cooperative R&D with endogenous technology differentiation. Journal of Economics and Management Strategy, 14 (2). pp. 461-476. ISSN 1058-6407
To link to this item DOI: 10.1111/j.1530-9134.2005.00048.x
We study a nontournament R&D duopoly. Before the standard R&D investment and quantity-setting stages, we consider a stage in which firms choose their R&D technologies. Spillovers negatively depend on R&D technology differentiation. We show that, in equilibrium, firms will choose identical or very similar R&D processes. Such equilibria may entail less differentiation than would be dictated by social welfare maximization.