Market competition, R&D spillovers, and firms' cost asymmetry

We examine the effects of firms' cost asymmetry on R&D investments. We obtain five novel results. First, the social preference between noncooperative and cooperative R&D investments is independent of the degree of firms' cost asymmetry. Second, R&D investments of low-cost firms...

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Bibliographic Details
Published inEconomics of innovation and new technology Vol. 29; no. 8; pp. 847 - 865
Main Authors Ishikawa, Nana, Shibata, Takashi
Format Journal Article
LanguageEnglish
Published Abingdon Routledge 16.11.2020
Taylor & Francis Ltd
Subjects
Asymmetric costs
Asymmetry
Companies
Competition
Investments
Low cost
Markets
oligopoly
R&D
Research & development
spillover
two-stage Cournot
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Summary:We examine the effects of firms' cost asymmetry on R&D investments. We obtain five novel results. First, the social preference between noncooperative and cooperative R&D investments is independent of the degree of firms' cost asymmetry. Second, R&D investments of low-cost firms are larger than those of high-cost firms. Third, for a small spillover, noncooperative R&D investments have a U-shaped curve with the degree of market competition. Fourth, as market competition intensifies, a low-cost (high-cost) firm may decrease (increase) its noncooperative R&D investment. Fifth, the difference in profit between low-cost and high-cost firms increases with the degree of market competition.
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ISSN:1043-8599
1476-8364
DOI:10.1080/10438599.2019.1673564