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Technological Spillovers, Product Market Rivalry and R&D Investment

Author

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  • Thomas Grebel

    (Economics department - MIT - Massachusetts Institute of Technology, TU - Technische Universität Ilmenau)

  • Lionel Nesta

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

We investigate the determinants of the sign of R&D reaction functions of two rival firms. Using a two-stage Cournot competition game, we show that this sign depends on four types of environments in terms of product rivalry and technology spillovers. We test the predictions of the model on the world's largest manufacturing corporations. Assuming that firms make R&D investments based on the R&D effort of the representative rival company, we develop a dynamic panel data model that accounts for the endogeneity of the decision of the rival firm. Empirical results corroborate the validity of the theoretical model.
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Suggested Citation

  • Thomas Grebel & Lionel Nesta, 2018. "Technological Spillovers, Product Market Rivalry and R&D Investment," Working Papers halshs-01948361, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01948361
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01948361
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    References listed on IDEAS

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    Cited by:

    1. Benjamin Montmartin & Ludovic Dibiaggio & Lionel Nesta, 2018. "Regional Alignment and Productivity Growth," SciencePo Working papers Main halshs-01948337, HAL.
    2. repec:spo:wpmain:info:hdl:2441/32ctbi8fbq8j5aom2j69qam6tf is not listed on IDEAS
    3. Zhen Peng & Yujun Lian & Joseph A. Forson, 2021. "Peer effects in R&D investment policy: Evidence from China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4516-4533, July.
    4. repec:hal:spmain:info:hdl:2441/32ctbi8fbq8j5aom2j69qam6tf is not listed on IDEAS

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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