Spillovers and R&D Incentive under Incomplete Information. (June 2018)

• Record Type: Journal Article
• Authors: Chatterjee, Rittwik; Chattopadhyay, Srobonti; Kabiraj, Tarun
• Is Part Of: Studies in microeconomics. Volume 6:Number 1/2(2018:Jun.)
• Page Start: 50
• Page End: 65
• Publication Date: 2018-06
• Subjects: R&D incentives -- Cournot duopoly -- Spillovers -- incomplete information; Microeconomics -- Periodicals; 338.505
• DOI: 10.1177/2321022218800183
• Languages: English
• ISSNs: 2321-0222

Abstract

Abstract: Spillovers of R&D outcome affect the R&D decision of a firm. The present paper discusses the R&D incentives of a firm when the extent of R&D spillover is private information to each firm. We construct a two-stage game involving two firms when the firms first decide simultaneously whether to invest in R&D or not, then they compete in quantity. Assuming general distribution function of firm types we compare R&D incentives of firms under alternative scenarios based on different informational structures. The paper shows that while R&D spillovers reduce R&D incentives under complete information unambiguously, however, it can be larger under incomplete information. JEL Classification: D43, D82, L13, O31