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R & D Strategy in International Mixed Duopoly with Research Spillovers
Author(s) -
Haruna Shoji,
Goel Rajeev K.
Publication year - 2015
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/1467-8454.12042
Subject(s) - duopoly , oligopoly , competition (biology) , microeconomics , economics , cournot competition , biology , ecology
This paper examines the international mixed duopoly behaviour with research spillovers. Using a two‐stage game with Research and Development ( R & D ) and output, we investigate the effects of imperfectly appropriable R & D on optimal R & D strategies of a domestic public firm and a foreign private firm across different market interactions: (i) international R & D competition, (ii) only the foreign firm conducts R & D , (iii) only the domestic public firm conducts R & D , (iv) no firm conducts R & D , and (v) research joint venture. The results show that firms' research performances are determined by the degree of spillovers and the optimal R & D strategies involve R & D competition. Spillovers are shown to be socially beneficial and their absence can prove to be a strategic deterrent, with the public firm monopolising the market. Some of these findings contrast with the traditional models of oligopoly (with or without R & D ) and mixed oligopoly (without R & D ).