Spillovers and R&D Incentive under Incomplete Information

Rittwik Chatterjee, Srobonti Chattopadhyay and Tarun Kabiraj

MPRA Paper from University Library of Munich, Germany

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.

Keywords: R&D incentives; Cournot duopoly; Spillovers; Incomplete information (search for similar items in EconPapers)
JEL-codes: D43 D82 L13 O31 (search for similar items in EconPapers)
Date: 2018-03-09
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth, nep-ino, nep-mic and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:85089

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