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On the prisoner’s dilemma in R&D with input spillovers and incentives for R&D cooperation

Author

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  • Burr, Chrystie
  • Knauff, Malgorzata
  • Stepanova, Anna
Abstract
This paper considers a standard model of strategic R&D with spillovers in R&D inputs, and extends the result that duopoly firms engaged in a standard two-stage game of R&D and Cournot competition end up in a prisoner’s dilemma situation for their R&D decisions, whenever spillover effects and R&D costs are relatively low. In terms of social welfare, this prisoner’s dilemma always works to the advantage of both consumers and society. This result allows a novel and enlightening perspective on some issues of substantial interest in the innovation literature. In particular, the incentive firms face towards R&D cooperation in the form of an R&D cartel is shown to be maximal for the case of zero spillovers, which is when the prisoner’s dilemma has the largest scope.

Suggested Citation

  • Burr, Chrystie & Knauff, Malgorzata & Stepanova, Anna, 2013. "On the prisoner’s dilemma in R&D with input spillovers and incentives for R&D cooperation," Mathematical Social Sciences, Elsevier, vol. 66(3), pages 254-261.
    • Handle: RePEc:eee:matsoc:v:66:y:2013:i:3:p:254-261
    DOI: 10.1016/j.mathsocsci.2013.05.004
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    8. Michal Ramsza & Adam Karbowski & Tadeusz Platkowski, 2021. "Process R&D investment and social dilemmas," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(3), pages 315-336, September.

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