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When Spillovers Enhance R&D Incentives

  • Rittwik Chatterjee
  • Srobonti ChattopadhyayEmail author
  • Tarun Kabiraj
Original Article
  • 6 Downloads

Abstract

It is commonly believed that spillover reduces R&D incentives of a firm. This happens because of the appropriability problem. However, some empirical literature shows the possibility of enhanced R&D incentives under spillovers. In the literature this is explained under incomplete information, but we show this theoretically under complete information. We show in particular that in a duopoly there are situations when with no spillovers only one firm invests in R&D, but under spillovers both the firms invest. This occurs when there is complementarity in research and the spillover rate lies in an interval specified by the size of R&D investment.

Keywords

R&D spillovers Appropriability problem Complete information R&D incentives 

JEL classifications

D43 L13 O31 

Notes

Acknowledgements

Authors would like to thank two anonymous referees of this journal for important comments and suggestions. However, the usual disclaimer applies.

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Copyright information

© The Indian Econometric Society 2019

Authors and Affiliations

  • Rittwik Chatterjee
    • 1
  • Srobonti Chattopadhyay
    • 2
    Email author
  • Tarun Kabiraj
    • 3
  1. 1.Centre for Studies in Social SciencesKolkataIndia
  2. 2.Department of EconomicsVidyasagar College for WomenKolkataIndia
  3. 3.Indian Statistical InstituteKolkataIndia

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