Cite JOURNAL ARTICLE
Mikrofundierung von Forschungs- und Entwicklungsausgaben der Firma bei unterschiedlichen Marktstrukturen
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 110 (1990), Iss. 2 : pp. 207–238
Within the framework of decision theory, the prospect of large rewards from innovation, and the fear of heavy losses from the failure to innovate, speed up development if costs are contractual. In a Nash equilibrium in investment strategies, R + D expenditure per firm declines with the number of participants in the race to innovate if costs are contractual. In a two-stage Nash duopoly model, it can be shown that strategic use of R + D will increase total output and the amount of R + D expenditures. In the case of non-stochastic innovations, the monopolist has a strong incentive to patent innovations preemptively before potential entrants can do so. These results have to be modified if the licensing of patents is allowed and stochastic innovations are assumed. When firms anticipate a sequence of innovations, the industry leader invests less than a potential entrant in R + D.