R&amp;D-Hindering Collusion

Bacchiega, Emanuele; Lambertini, Luca; Mantovani, Andrea

doi:10.2202/1935-1682.2157

Cited by 11 publications

(19 citation statements)

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“…in the resulting 2 × 2 R&D game) emerges for a subset of parameters of the model (also see Amir, 2000b). Finally, Bachiegga et al . (2008) characterize a prisoner's dilemma in a modified version of the AJ model where firms decide in an added initial period whether they will engage in R&D or not.…”

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confidence: 97%

R&D AS A PRISONER'S DILEMMA AND R&D‐AVOIDING CARTELS

Amir

Garcia

Halmenschlager³

et al. 2010

The Manchester School

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Duopoly firms engaged in a standard two-stage game of R&D and Cournot competition are caught in a prisoner's dilemma for their R&D decisions whenever spillover effects are low. This effect works to the advantage of consumers and society. This result provides an interesting perspective on the well-known wedge between private and social incentives for R&D. The prisoner's dilemma is the key effect behind this wedge under low spillovers. The latter take over when sufficiently high, as is widely recognized. This mutually exclusive nature of the prisoner's dilemma and significant spillovers also serves to explain the incentives to form R&D cartels.

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confidence: 97%

R&D AS A PRISONER'S DILEMMA AND R&D‐AVOIDING CARTELS

Amir

Garcia

Halmenschlager³

et al. 2010

The Manchester School

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“…To make this point, we extend the AJ model of cost-reducing R&D considering CSR (instead of only profit-maximizing) firms. The main findings of this work go in the direction of solving the prisoner's dilemma that emerge in the AJ literature (Bacchiega et al 2010) also in the absence of R&D spillovers. This is because of the pro-social effects that CSR generates on output passing through the R&D investments.…”

Section: Introductionmentioning

confidence: 82%

A Note on R&D Innovation with Socially Responsible Firms

2022

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This work revisits the R&D duopoly à la (d’Aspremont and Jacquemin, Am Econ Rev 78:1133–1137, 1988, d’Aspremont and Jacquemin, Am Econ Rev 80:641–642, 1990) (AJ henceforth) considering an economy with firms engaged in corporate social responsibility (CSR). In the traditional AJ setting without spill-over effects, firms invest in R&D as a sub-game perfect Nash equilibrium (SPNE) strategy, but they are cast into a prisoner’s dilemma. Socially responsible firms can get the same SPNE result. Preliminarily, we show that the level of firms’ social concern has a positive effect on the R&D investment. Unlike the basic framework, however, if the consumer welfare weights enough in each firm’s objective, investing in R&D becomes a firm’s utility-enhancing strategy also without R&D spillovers: the prisoner’s dilemma vanishes, and the R&D investment-decision game with CSR turns out to be an anti-prisoner’s dilemma, in which investing in R&D is the firm’s Pareto-efficient choice. Then, if firms are CSR-oriented, investing in R&D becomes a Pareto-superior outcome for society (with or without R&D spillovers). The article also shows that R&D subsidies can be used as a welfare-maximising tool.

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“…First, regardless of the degree of spillover (spillover is the extent to which one firm's R&D reduces the production cost of their rival), firms will not typically overinvest. If the degree of spillover is small, the prisoner's dilemma causes them to invest more individually than they would cooperatively (although the cooperative level is nonzero) but invest less than would a social planner (Bachiegga, Lambertini, & Mantovani, ). If the degree of spillover is large, the externality causes duopolists to underinvest relative to both the social planner and their own cooperatively chosen investment (D'Aspremont & Jacquemin, ).…”

Section: Literature Review and Contextmentioning

confidence: 99%

R&D investment under spatial price discrimination

Heywood

Wang

2017

Manage Decis Econ

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This paper uniquely examines an R&D rivalry under spatial price discrimination and compares two alternative timings. When firms invest first, they locate efficiently but overinvest in cost‐reducing R&D if spillover is modest. When firms locate first, they locate inefficiently and always underinvest in cost‐reducing R&D. Although the R&D investment improves social welfare under either timing, profit always declines and so it would never be undertaken if firms cooperate. Both timings are relevant as we identify circumstances under which each will endogenously be chosen in a premarket stage. Critically, the equilibrium timing is often not the socially beneficial timing.

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R&D-Hindering Collusion

Cited by 11 publications

References 0 publications

R&D AS A PRISONER'S DILEMMA AND R&D‐AVOIDING CARTELS

R&D AS A PRISONER'S DILEMMA AND R&D‐AVOIDING CARTELS

A Note on R&D Innovation with Socially Responsible Firms

R&D investment under spatial price discrimination

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