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R&D COMPETITION AND ENDOGENOUS SPILLOVERS
Author(s) -
JIN JIM Y.,
TROEGE MICHAEL
Publication year - 2006
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2006.00481.x
Subject(s) - imitation , economics , subsidy , duopoly , microeconomics , welfare , competition (biology) , economic surplus , marginal cost , cournot competition , market economy , ecology , biology , psychology , social psychology
The paper examines firms’ choices between innovation and imitation in duopoly. We show that in the unique equilibrium asymmetric firms choose the same level of expenditure on imitation and the same ratio of innovative cost reduction to output. We evaluate the marginal contribution of innovation and imitation expenditure by small and large firms to consumer surplus and welfare, and discuss the desirability of differentiated R&D subsidies on innovation and imitation in terms of R&D tax rebates.