The degree of spillovers and the number of rivals for maximum effective R &D

Abstract

The amount of cost-reduction or effective R&D that results in a symmetric sequential Nash equilibrium with quadratic payoffs and differentiated goods, is shown to increase with spillovers in "small group" industries and to achieve a maximum for spillovers that are not perfect in "large group" industries. Similar tendencies apply for consumer surplus, profits and static welfare. More rivals typically lead to reduced investments, output and profitability, while consumer surplus and welfare increase, or at least do not decrease. Limited entry in small groups may enhance innovative investments, profitability and consumer surplus, if only product differentiation, R&D efficiency and spillovers are sufficiently high. Too many rivals will then again lead to reductions and a decrease in static welfare. JEL Classification: 022, 611, 621.

Effect of R&D Collaboration with Research Organizations on Innovation: The Mediation Effect of Environmental Performance

“…Collaborative relationships with research organizations, in particular, can be even more beneficial compared to those with other kinds of external organizations due to a larger incoming spillover of new and specialized knowledge [61][62][63]. Our finding corroborates prior studies, which have suggested the importance of broader collaboration for system redesign and technological innovation for sustainable management [4].…”

“…Collaboration with research organizations, in particular, has been associated with more incoming spillover of R&D knowledge into the firm and less outgoing spillovers [61][62][63]. When firms collaborate with suppliers or competitors, they make an effort to maximize the gain of incoming spillovers as well as to minimize the loss of outgoing spillovers [64].…”

R&D Cooperation and Spillovers: Some Empirical Evidence

“…6 When goods are substitutes the level of product differentiation and the number of rivals are important parameters that determine the critical spillover level. (see De Bondt et al (1992), Röller et al (1997)). …”

Heterogeneity in R&D cooperation strategies

“…between competing firms, stressing the importance of the degree of product market competition. When firms are not direct competitors but market independent or complementary goods, cooperation is associated with higher R&D investment levels independent of any critical level of spillovers (De Bondt et al, 1992;Röller et al, 1997). In such a setting where firms are less direct competitors, joint R&D and possible cheating have no detrimental effect in terms of strengthening the product market position of the rival.…”