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Innovation Strategies in a Competitive Dynamic Setting

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  • Ruslan Lukach
  • Joseph Plasmans
  • Peter M. Kort

Abstract

This paper presents a dynamic model of a competitive R&D and production duopoly subject to knowledge spillovers. Two asymmetric firms operate for a limited period of time and dispose their knowledge capital in the end. Both firms and the social planner prefer the R&D-cooperative strategy over the competitive one regardless of the intensity of knowledge spillovers. Accumulation of knowledge capital results allows the monopolist to have lower marginal cost of production and charge a lower market price than a fully competitive duopoly. Being able to define the degree of knowledge exchange when creating a research joint venture, the firms do not necessary choose the highest degree of cooperation available.

Suggested Citation

  • Ruslan Lukach & Joseph Plasmans & Peter M. Kort, 2005. "Innovation Strategies in a Competitive Dynamic Setting," CESifo Working Paper Series 1395, CESifo.
    • Handle: RePEc:ces:ceswps:_1395
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    References listed on IDEAS

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    7. Petit, Maria Luisa & Tolwinski, Boleslaw, 1999. "R&D cooperation or competition?," European Economic Review, Elsevier, vol. 43(1), pages 185-208, January.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    innovation; R&D; spillovers; cooperation;
    All these keywords.

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