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Strategic R&D with Knowledge Spillovers and Endogenous Time to Complete

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  • Lukach, R.
  • Kort, P.M.

    (Tilburg University, School of Economics and Management)

  • Plasmans, J.E.J.

    (Tilburg University, School of Economics and Management)

Abstract

We present a model where firms make competitive decisions about the optimal duration (or time to build) of their R&D projects. Choosing its project’s duration, the firm can choose to become a leader or a follower, based on its R&D efficiency, the size of the R&D to be carried out and the degree of innovation, which this research will produce. It is shown that asymmetry in R&D efficiency between firms is an important factor determining feasibility of the preemption and attrition scenarios in competitive R&D with time to build. Scenarios of attrition and preemption games are most likely to occur when competitors have similar R&D efficiencies. In case of largely asymmetric firms the games of attrition and preemption are very unlikely, thus the R&D duration choices of firms are determined by the actual trade-off between the benefits of earlier innovation and the costs of faster R&D project completion.
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Suggested Citation

  • Lukach, R. & Kort, P.M. & Plasmans, J.E.J., 2007. "Strategic R&D with Knowledge Spillovers and Endogenous Time to Complete," Other publications TiSEM 58287d74-7d7e-42d7-a654-5, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:58287d74-7d7e-42d7-a654-5a7a98ae2791
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