Relative Performance and R&D Competition
This paper formulates a duopoly model in which firms care about relative profits as well as their own profits. Our purpose is to investigate the relationship between the weight of relative performance and R&D expenditure. We find a non-monotone relationship between the weight of relative performance in their objectives and their R&D levels. Both highly reciprocal (altruism) and negative reciprocal attitudes yield high levels of R&D, while the intermediate situations yield low levels of R&D.
Year of publication: |
2009-08
|
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Authors: | Matsumura, Toshihiro ; Matsushima, Noriaki ; Cato, Susumu |
Institutions: | Institute of Social and Economic Research (ISER), Osaka University |
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