IDEAS home Printed from https://ideas.repec.org/a/wly/navres/v59y2012i2p128-145.html
   My bibliography  Save this article

Resource allocation in an asymmetric technology race with temporary advantages

Author

Listed:
  • Boaz Golany
  • Moshe Kress
  • Michal Penn
  • Uriel G. Rothblum

Abstract

We consider two opponents that compete in developing asymmetric technologies where each party's technology is aimed at damaging (or neutralizing) the other's technology. The situation we consider is different than the classical problem of commercial R&D races in two ways: First, while in commercial R&D races the competitors compete over the control of market share, in our case the competition is about the effectiveness of technologies with respect to certain capabilities. Second, in contrast with the “winner‐takes‐all” assumption that characterizes much of the literature on this field in the commercial world, we assume that the party that wins the race gains a temporary advantage that expires when the other party develops a superior technology. We formulate a variety of models that apply to a one‐sided situation, where one of the two parties has to determine how much to invest in developing a technology to counter another technology employed by the other party. The decision problems are expressed as (convex) nonlinear optimization problems. We present an application that provides some operational insights regarding optimal resource allocation. We also consider a two‐sided situation and develop a Nash equilibrium solution that sets investment values, so that both parties have no incentive to change their investments. © 2012 Wiley Periodicals, Inc. Naval Research Logistics 59: 128–145, 2012

Suggested Citation

  • Boaz Golany & Moshe Kress & Michal Penn & Uriel G. Rothblum, 2012. "Resource allocation in an asymmetric technology race with temporary advantages," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(2), pages 128-145, March.
    • Handle: RePEc:wly:navres:v:59:y:2012:i:2:p:128-145
    DOI: 10.1002/nav.21477
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/nav.21477
    Download Restriction: no
    File URL: https://libkey.io/10.1002/nav.21477?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jonathan F. Bard, 1985. "Parallel Funding of R&D Tasks with Probabilistic Outcomes," Management Science, INFORMS, vol. 31(7), pages 814-828, July.
    2. Abdul Ali & Manohar U. Kalwani & Dan Kovenock, 1993. "Selecting Product Development Projects: Pioneering versus Incremental Innovation Strategies," Management Science, INFORMS, vol. 39(3), pages 255-274, March.
    3. Jaesun Park, 1987. "Dynamic Patent Races with Risky Choices," Management Science, INFORMS, vol. 33(12), pages 1563-1571, December.
    4. Wallace J. Hopp, 1987. "A Sequential Model of R&D Investment Over an Unbounded Time Horizon," Management Science, INFORMS, vol. 33(4), pages 500-508, April.
    5. Kurt M. Bretthauer & Bala Shetty, 1995. "The Nonlinear Resource Allocation Problem," Operations Research, INFORMS, vol. 43(4), pages 670-683, August.
    6. Doraszelski, Ulrich, 2003. "An R&D Race with Knowledge Accumulation," RAND Journal of Economics, The RAND Corporation, vol. 34(1), pages 20-42, Spring.
    7. Christopher Harris & John Vickers, 1985. "Perfect Equilibrium in a Model of a Race," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(2), pages 193-209.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pelin G. Canbolat & Boaz Golany & Inbal Mund & Uriel G. Rothblum, 2012. "A Stochastic Competitive R&D Race Where “Winner Takes All”," Operations Research, INFORMS, vol. 60(3), pages 700-715, June.
    2. Scott A. Shane & Karl T. Ulrich, 2004. "50th Anniversary Article: Technological Innovation, Product Development, and Entrepreneurship in Management Science," Management Science, INFORMS, vol. 50(2), pages 133-144, February.
    3. Roy Cerqueti & Daniele Marazzina & Marco Ventura, 2016. "Optimal Investment in Research and Development Under Uncertainty," Journal of Optimization Theory and Applications, Springer, vol. 168(1), pages 296-309, January.
    4. Benjamin Rene Kern & Juan Manuel Mantilla Contreras, 2014. "Mergers and the Incentives to Undertake Product Innovation Oriented R&D: First Steps Towards an Assessment Approach," MAGKS Papers on Economics 201417, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Nguyen, Thang, 2004. "Technological Progress in Races for Product Supremacy," MPRA Paper 235, University Library of Munich, Germany, revised 18 Jul 2006.
    6. Dawid, Herbert & Keoula, Michel Y. & Kopel, Michael & Kort, Peter M., 2023. "Dynamic investment strategies and leadership in product innovation," European Journal of Operational Research, Elsevier, vol. 306(1), pages 431-447.
    7. Fershtman, Chaim & Markovich, Sarit, 2006. "Patents, Imitation and Licensing In an Asymmetric Dynamic R&D Race," Foerder Institute for Economic Research Working Papers 275706, Tel-Aviv University > Foerder Institute for Economic Research.
    8. Alessandro Bonatti & Heikki Rantakari, 2016. "The Politics of Compromise," American Economic Review, American Economic Association, vol. 106(2), pages 229-259, February.
    9. By Kenneth L. Judd & Karl Schmedders & Şevin Yeltekin, 2012. "Optimal Rules For Patent Races," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 23-52, February.
    10. Fershtman, Chaim & Markovich, Sarit, 2010. "Patents, imitation and licensing in an asymmetric dynamic R&D race," International Journal of Industrial Organization, Elsevier, vol. 28(2), pages 113-126, March.
    11. Hyunbae Chun & Sung-Bae Mun, 2014. "Innovative Activities of an Incumbent and a Potential Entrant: An Empirical Exploration of the Role of Uncertainty in Product and Process Innovations," Working Papers 1406, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy).
    12. Meng, Rujing, 2008. "A patent race in a real options setting: Investment strategy, valuation, CAPM beta, and return volatility," Journal of Economic Dynamics and Control, Elsevier, vol. 32(10), pages 3192-3217, October.
    13. Steinmetz, Alexander, 2010. "Competition, innovation, and the effect of knowledge accumulation," W.E.P. - Würzburg Economic Papers 81, University of Würzburg, Department of Economics.
    14. Richard Gilbert, 2006. "Looking for Mr. Schumpeter: Where Are We in the Competition-Innovation Debate?," NBER Chapters, in: Innovation Policy and the Economy, Volume 6, pages 159-215, National Bureau of Economic Research, Inc.
    15. Alexander Steinmetz, 2015. "Competition, innovation, and the effect of R&D knowledge," Journal of Economics, Springer, vol. 115(3), pages 199-230, July.
    16. Alexander Steinmetz, 2008. "Competition, Innovation and the Effect of Knowledge Accumulation," Working Papers 053, Bavarian Graduate Program in Economics (BGPE).
    17. Ufuk Akcigit & Sina T. Ates, 2023. "What Happened to US Business Dynamism?," Journal of Political Economy, University of Chicago Press, vol. 131(8), pages 2059-2124.
    18. Dosis, Anastasios & Muthoo, Abhinay, 2019. "Experimentation in Dynamic R&D Competition," CRETA Online Discussion Paper Series 52, Centre for Research in Economic Theory and its Applications CRETA.
    19. Aner Sela, 2021. "Resource Allocations In Multi-Stage Contests," Working Papers 2105, Ben-Gurion University of the Negev, Department of Economics.
    20. Joao Macieira, 2010. "Oblivious Equilibrium in Dynamic Discrete Games," 2010 Meeting Papers 680, Society for Economic Dynamics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:navres:v:59:y:2012:i:2:p:128-145. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1520-6750 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.