Product market competition and R&D rivalry
R&D rivalry, product market competition
This paper analyzes the impact of a future R&D race on current firm behavior in the product market. It is shown that, in order to “soften” rivals in the future R&D race, firms behave less aggressively in the pre-innovation product market than in the standard duopoly models. As a result, the R&D rates are lower than what firms would choose if standard duopoly outcomes are assumed. R&D cooperation is shown to be capable of restoring the duopoly outcome.
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Lin, P. (1998). Product market competition and R&D rivalry. Economics Letters, 58(1), 105-111. doi: 10.1016/S0165-1765(97)00176-6