R&D: Competition, Risk, and Performance
Anticipated postinnovation collusion encourages R&D effort, but realized collusion later yields deadweight losses. In balancing this tradeoff, Bertrand industries sometimes outperform Cournot; sometimes they do not. Both usually outperform perfectly collusive industries. The optimal level of collusion is often less collusive than Cournot duopoly. In Bertrand industries, too few firms do R&D. The same goes for long-shot or high-cost projects in all industries. However, in perfectly collusive industries, too many firms invest when a project has medium to high chances of success. Investment by Cournot industries is often close to optimal.
Year of publication: |
1993
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Authors: | Quirmbach, Herman C. |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 24.1993, 2, p. 157-197
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Publisher: |
The RAND Corporation |
Saved in:
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