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Stackelberg Game, Vertical Relations And R&D Investments: Are There First-Mover Advantages?

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  • APOSTOLIS PAVLOU

    (Council of Economic Advisers, Ministry of Finance, Athens 10180, Greece)

Abstract

This paper studies a Stackelberg game among the downstream firms in a vertical industry where one-way R&D spillovers occur, from the leader to the follower. When the upstream market is perfectly competitive under certain conditions the standard first-mover advantages disappear. When we move to the upstream monopolistic case we find that despite the existence of spillovers in most of the cases, the leader gets higher profits and thus first-mover advantages are reinstated due to the price setting behavior of the upstream firm. It therefore challenges to some extent the “naive†idea that under one-way spillovers there are no incentives for early movers.

Suggested Citation

  • Apostolis Pavlou, 2025. "Stackelberg Game, Vertical Relations And R&D Investments: Are There First-Mover Advantages?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 70(02), pages 367-378, March.
    • Handle: RePEc:wsi:serxxx:v:70:y:2025:i:02:n:s0217590821500302
    DOI: 10.1142/S0217590821500302
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    More about this item

    Keywords

    Stackelberg games; R&D investments; spillovers; wholesale prices; vertical relations;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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