Advertisement

Cooperating and Non-cooperating Firms in Inventive and Absorptive Research

  • Slim Ben Youssef
  • Michèle Breton
  • Georges Zaccour
Article

Abstract

We consider a duopoly competing in quantity, where firms can invest in both innovative and absorptive research and development to reduce their unit production cost, and where they benefit from free spillovers between them. We analyze the case where firms act non-cooperatively and the case where they cooperate by forming a research joint venture. We show that, in both modes of play, there exists a unique symmetric solution. We find that the level of investment in innovative research and development is always the highest and that the efficiency of investment in absorptive research has almost no impact on the equilibrium solution.

Keywords

Innovative R&D Absorptive R&D Learning parameter Spillover Research joint venture 

Notes

Acknowledgements

Research supported by NSERC, Canada, and HEC Montréal. We wish to thank the four anonymous reviewers and Gustav Feichtinger for valuable comments on a previous draft. The usual disclaimer applies.

References

  1. 1.
    D’Aspremont, C., Jacquemin, A.: Cooperative and noncooperative R&D in duopoly with spillovers. Am. Econ. Rev. 78, 1133–1137 (1988) Google Scholar
  2. 2.
    D’Aspremont, C., Jacquemin, A.: Cooperative and noncooperative R&D in duopoly with spillovers: erratum. Am. Econ. Rev. 80, 641–642 (1990) Google Scholar
  3. 3.
    Suzumura, K.: Cooperative and noncooperative R&D in an oligopoly with spillovers. Am. Econ. Rev. 82, 1307–1320 (1992) Google Scholar
  4. 4.
    Salant, S.W., Shaffer, G.: Optimal asymmetric strategies in research joint ventures. Int. J. Ind. Organ. 16, 195–208 (1998) CrossRefGoogle Scholar
  5. 5.
    Kamien, M.I., Muller, E., Zang, I.: Research joint ventures and R&D cartels. Am. Econ. Rev. 82, 1293–1306 (1992) Google Scholar
  6. 6.
    Amir, R., Wooders, J.: Cooperation vs. competition in R&D: the role of stability of equilibrium. J. Econ. 67, 63–73 (1998) zbMATHGoogle Scholar
  7. 7.
    Cohen, W.M., Levinthal, D.A.: Innovation and learning: the two faces of R&D. Econ. J. 99, 569–596 (1989) CrossRefGoogle Scholar
  8. 8.
    Poyago-Theotoky, J.: A note on endogenous spillovers in a non-tournament R&D duopoly. Rev. Ind. Organ. 15, 253–262 (1999) CrossRefGoogle Scholar
  9. 9.
    Kamien, M.I., Zang, I.: Meet me halfway: research joint ventures and absorptive capacity. Int. J. Ind. Organ. 18, 995–1012 (2000) CrossRefGoogle Scholar
  10. 10.
    Wiethaus, L.: Absorptive capacity and connectedness: why competing firms also adopt identical R&D approaches. Int. J. Ind. Organ. 23, 467–481 (2005) CrossRefGoogle Scholar
  11. 11.
    Grünfeld, L.A.: Meet me halfway but don’t rush: absorptive capacity and strategic R&D investment revisited. Int. J. Ind. Organ. 21, 1091–1109 (2003) CrossRefGoogle Scholar
  12. 12.
    Leahy, D., Neary, J.P.: Absorptive capacity, R&D spillovers, and public policy. Int. J. Ind. Organ. 25, 1089–1108 (2007) CrossRefGoogle Scholar
  13. 13.
    Kaiser, U.: R&D with spillovers and endogenous absorptive capacity. J. Inst. Theor. Econ. 158, 286–303 (2002) CrossRefGoogle Scholar
  14. 14.
    Milliou, C.: Endogenous protection of R&D investments. Can. J. Econ. 42, 184–205 (2009) CrossRefGoogle Scholar
  15. 15.
    Frascatore, M.R.: Absorptive capacity in R&D joint ventures when basic research is costly. Top. Econ. Anal. Policy 6(1), Article 22 (2006) Google Scholar
  16. 16.
    Jin, J.Y., Troege, M.: R&D competition and endogenous spillovers. Manch. Sch. 74, 40–51 (2006) CrossRefGoogle Scholar
  17. 17.
    Hammerschmidt, A., Pain, N., Gain, N.: An R&D model with endogenous absorptive capacity. J. Inst. Theor. Econ. 165, 418–437 (2009) CrossRefGoogle Scholar
  18. 18.
    Kanniainen, V., Stenbacka, R.: Endogenous imitation and implications for technology policy. J. Inst. Theor. Econ. 156, 360–381 (2000) Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  • Slim Ben Youssef
    • 1
  • Michèle Breton
    • 2
  • Georges Zaccour
    • 2
  1. 1.ESC de Tunis and LAREQUADManouba UniversityTunisTunisia
  2. 2.GERAD, HEC MontréalMontréalCanada

Personalised recommendations