Strategic investments in R&D and efficiency in the presence of free riders. (English) Zbl 1414.91255
Summary: We consider an industry composed of two types of firms, namely, innovators that invest in process research and development (R&D), and surfers that do not but benefit from knowledge spillover. We verify if the conclusions reached in the seminal paper by C. d’Aspremont and A. Jacquemin, ”Cooperative and non cooperative R&D in duopoly with spillovers”, [Am. Econ. Rev. 21, 1133–1137, (1988)] hold in this setting. We obtain that cooperation among innovators still lead to higher R&D and output levels than when they do not cooperate. Our main result is that the presence of surfers in an industry can be welfare improving under some conditions.
MSC:
| 91B38 | Production theory, theory of the firm |
| 91A12 | Cooperative games |
| 91A20 | Multistage and repeated games |
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