Product Market Competition and Investments in Cooperative R&D

Jeroen Hinloopen; Jan Vandekerckhove

Product Market Competition and Investments in Cooperative R&D

Jeroen Hinloopen^*, Jan Vandekerckhove

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

Building on the framework developed by Qiu (1997) we investigate the influence of product market competition on incentives to invest in cooperative R&D. For that we disentangle the three components that make up the combined-profits externality. The strategic component is always negative and the size component is always positive. The spillover component is negative (positive) with Bertrand (Cournot) competition. Cournot competition thus yields more cooperative R&D, which could drive the Cournot-Nash price below the Bertrand-Nash price. Our decomposition also explains why, under Cournot competition, cooperative R&D exceeds non-cooperative R&D only if spillovers are "high enough."

Original language	English
Article number	55
Number of pages	24
Journal	B.E. Journal of Economic Analysis & Policy
Volume	11
Issue number	1
Publication status	Published - 2011
Externally published	Yes

Keywords

Bertrand competition
Cournot competition
cooperative R&D
efficiency
RESEARCH JOINT VENTURES
ENDOGENOUS SPILLOVERS
KNOWLEDGE SPILLOVERS
DEVELOPMENT DUOPOLY
INDUSTRY
INCENTIVES
EFFICIENCY
RETURNS

Cite this

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title = "Product Market Competition and Investments in Cooperative R&D",

abstract = "Building on the framework developed by Qiu (1997) we investigate the influence of product market competition on incentives to invest in cooperative R&D. For that we disentangle the three components that make up the combined-profits externality. The strategic component is always negative and the size component is always positive. The spillover component is negative (positive) with Bertrand (Cournot) competition. Cournot competition thus yields more cooperative R&D, which could drive the Cournot-Nash price below the Bertrand-Nash price. Our decomposition also explains why, under Cournot competition, cooperative R&D exceeds non-cooperative R&D only if spillovers are {"}high enough.{"}",

keywords = "Bertrand competition, Cournot competition, cooperative R&D, efficiency, RESEARCH JOINT VENTURES, ENDOGENOUS SPILLOVERS, KNOWLEDGE SPILLOVERS, DEVELOPMENT DUOPOLY, INDUSTRY, INCENTIVES, EFFICIENCY, RETURNS",

author = "Jeroen Hinloopen and Jan Vandekerckhove",

year = "2011",

language = "English",

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journal = "B.E. Journal of Economic Analysis & Policy",

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T1 - Product Market Competition and Investments in Cooperative R&D

AU - Hinloopen, Jeroen

AU - Vandekerckhove, Jan

PY - 2011

Y1 - 2011

N2 - Building on the framework developed by Qiu (1997) we investigate the influence of product market competition on incentives to invest in cooperative R&D. For that we disentangle the three components that make up the combined-profits externality. The strategic component is always negative and the size component is always positive. The spillover component is negative (positive) with Bertrand (Cournot) competition. Cournot competition thus yields more cooperative R&D, which could drive the Cournot-Nash price below the Bertrand-Nash price. Our decomposition also explains why, under Cournot competition, cooperative R&D exceeds non-cooperative R&D only if spillovers are "high enough."

AB - Building on the framework developed by Qiu (1997) we investigate the influence of product market competition on incentives to invest in cooperative R&D. For that we disentangle the three components that make up the combined-profits externality. The strategic component is always negative and the size component is always positive. The spillover component is negative (positive) with Bertrand (Cournot) competition. Cournot competition thus yields more cooperative R&D, which could drive the Cournot-Nash price below the Bertrand-Nash price. Our decomposition also explains why, under Cournot competition, cooperative R&D exceeds non-cooperative R&D only if spillovers are "high enough."

KW - Bertrand competition

KW - Cournot competition

KW - cooperative R&D

KW - efficiency

KW - RESEARCH JOINT VENTURES

KW - ENDOGENOUS SPILLOVERS

KW - KNOWLEDGE SPILLOVERS

KW - DEVELOPMENT DUOPOLY

KW - INDUSTRY

KW - INCENTIVES

KW - EFFICIENCY

KW - RETURNS

M3 - Article

SN - 2194-6108

VL - 11

JO - B.E. Journal of Economic Analysis & Policy

JF - B.E. Journal of Economic Analysis & Policy

IS - 1

M1 - 55

ER -

Product Market Competition and Investments in Cooperative R&D

Abstract

Keywords

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