Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107822
Authors: 
Smrkolj, Grega
Wagener, Florian
Year of Publication: 
2014
Series/Report no.: 
Tinbergen Institute Discussion Paper 14-112/II
Abstract: 
We study a stochastic dynamic game of process innovation in which firms can initiate and terminate R&D efforts and production at different times. We discern the impact of knowledge spillovers on the investments in existing markets, as well as on the likely structure of newly forming markets, for all possible asymmetries between firms. We show that the relation between spillovers, R&D efforts, and surpluses is non-monotonic and dependent on both the relative and absolute efficiency of firms. Larger spillovers increase the likelihood that a new technology is brought to production, but they do not necessarily make the industry more competitive.
Subjects: 
Differential game
Feedback Nash equilibrium
Numerical partial differential equations
R&D
Spillovers
JEL: 
C61
C63
C73
D43
D92
L13
O31
Document Type: 
Working Paper

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