How R&D Competition Affects Investment Choices

Abstract

International audienceWe analyze firm research and development investment incentives in a framework in which only one innovation can be undertaken. We assume that the probability of discovering the innovation depends on a parameter that represents the technical difficulty of innovating. We show that patent protection is not always necessary for investments to be made. With patent protection, research and development competition leads to a symmetric equilibrium. Moreover, firms over-invest in marginal innovation but under-invest in difficult innovation, which explains why and how public authorities should intervene to promote specific research in certain economic sectors

Determinants of process innovation introductions: Evidence from 115 developing countries

“…A contributing fact to this may be the sample size, which is reduced by one third in the estimation of the model including patent protection index due to missing data for that variable. Lafay and Maximin () note that patent protections are not always necessary to drive research investments (also see Chen & Puttitanun, ).…”

COOPERATIVE AND NON-COOPERATIVE R&D IN PRODUCT INNOVATION AND FIRM PERFORMANCE

“…If decisions on both R&D investments and final products are coordinated, firms follow a strategy of a full industry cartel (such a strategy has been distinguished by d ' Aspremont & Jacquemin, 1988). Coordination of decisions on product price or product output with competitors Notes: own elaboration based on d' Aspremont and Jacquemin (1988), Kamien et al (1992) and Lafay and Maximin (2017).…”

“…The building blocks of the model are the variables identified in the relevant literature (see, Table 2). Spence (1984), Katz (1986), D' Aspremont and Jacquemin (1988), Kamien et al (1992), Kamien and Zang (2000), Czarnitzki et al (2007), Bourreau and Dogan 2010 2019Marginal manufacturing costs D' Aspremont and Jacquemin (1988), Kamien et al (1992), Kamien and Zang (2000), Lee and Sung (2005), Lafay and Maximin (2017) Price of a final good Kamien et al (1992), Ziss (1994), Qiu (1997), Hinloopen (2000), Karbowski and Prokop (2018) Output of a final good D' Aspremont and Jacquemin (1988), Kamien et al (1992), Kamien and Zang (2000), Lafay and Maximin (2017), Karbowski and Prokop (2018) Quality of a final good Lee (1999), Lee and Sung (2005) Consumer utility from a final good Lee (1999), Lee and Sung (2005) Total revenues (sales) D' Aspremont and Jacquemin (1988), Kamien et al (1992), Kamien and Zang (2000), Lee and Sung (2005), Lafay and Maximin (2017) Total profits D' Aspremont and Jacquemin (1988), Kamien et al (1992), Kamien and Zang (2000), Lee and Sung (2005), Lafay and Maximin (2017), Karbowski and Prokop (...…”

“…Industrial economics models distinguish two distinct stages of an innovative behaviour of firms (d ' Aspremont & Jacquemin, 1988;Kamien, Muller, & Zang, 1992;Lafay & Maximin, 2017). In the first, investment stage, firms decide on their R&D investment values.…”

Schumpeterian hypothesis revisited: on market structure and firms’ R&D

“…Source: Own preparation based on: d 'Aspremont & Jacquemin (1988), Belleflamme & Peitz (2015), Kamien & Zang (2000), Kamien et al (1992), , Lafay & Maximin (2017). Table 3.…”