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Cost Reduction, Competitive Pressure and Firms' Optimal R&D Strategies in a Duopolistic Industry

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Abstract

This paper deals with a duopolistic industry where firms are engaged in cost-reducing R&D activity in order to maximize their market shares. Firms' R&D competition is characterized as a dynamic noncooperative feedback game where the optimal strategies are affected by the extra-industry R&D activity and the degree of intra-industry spillovers. Numerical simulations highlight the importance of the assumptions on the firms' absorptive capacity (to exploit external knowledge) in determining the optimal levels of firms R&D investrnents.

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Authors and Affiliations

  1. National Research Council, Institute of Systems Analysis and Computer Science, Viale Manzoni 30, 00185, Roma, Italy

    Domenico Campisi & Paolo Mancuso

  2. Department of Production, Systems and Computer Science, University of Rome “Tor Vergata”, Via della Ricerca Scientifica, 00133, Roma, Italy

    Alberto Nastasi

Authors
  1. Domenico Campisi
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  2. Paolo Mancuso
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  3. Alberto Nastasi
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Campisi, D., Mancuso, P. & Nastasi, A. Cost Reduction, Competitive Pressure and Firms' Optimal R&D Strategies in a Duopolistic Industry. Review of Industrial Organization 12, 259–270 (1997). https://doi.org/10.1023/A:1007762402056

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  • DOI: https://doi.org/10.1023/A:1007762402056

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