Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/67968
Authors: 
Breitmoser, Yves
Tan, Jonathan H. W.
Zizzo, Daniel John
Year of Publication: 
2008
Series/Report no.: 
CeDEx Discussion Paper, The University of Nottingham 2008-04
Abstract: 
This paper presents an experimental study of dynamic indefinite horizon R&D races with uncertainty and multiple prizes. The theoretical predictions are highly sensitive: small parameter changes determine whether technological competition is sustained, or converges into a market structure with an entrenched leadership and lower aggregate R&D. The subjects' strategies are far less sensitive. In most treatments, the R&D races tend to converge to entrenched leadership. Investment is highest when rivals are close. This stylized fact, and so the usefulness of neck-to-neck competition in general, is largely unrelated to rivalry concerns but can be explained using a quantal response extension of Markov perfection.
Subjects: 
R&D race
innovation
dynamics
experiment
JEL: 
C72
C91
O31
Document Type: 
Working Paper

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