Delegation vs Cost-Reducing R&D in a Cournot Duopoly.

Lambertini, Luca ; Primavera, Gabriele (2000) Delegation vs Cost-Reducing R&D in a Cournot Duopoly. Bologna: Dipartimento di Scienze economiche DSE, p. 16. DOI 10.6092/unibo/amsacta/4932. In: Quaderni - Working Paper DSE (377). ISSN 2282-6483.
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Abstract

We describe a duopoly model where stockholders assess the relative profitability of delegation versus process innovation. Delegation may not be a dominant strategy. When it is, the game is not necessarily a prisoners’ dilemma. Our model yields several equilibria where at least one firm remains entrepreneurial and finds it preferable to undertake cost-reducing R&D activities. Then, we introduce the possibility of using delegation and cost-reducing R&D jointly. The use of R&D investment by entrepreneurial firms is a dominated strategy, so that firms always separate ownership from control, while they don’t necessarily combine delegation with process innovation.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Primavera, Gabriele
Keywords
Cournot behaviour, delegation, cost-reducing R&D
Subjects
ISSN
2282-6483
DOI
Deposit date
05 Apr 2016 10:09
Last modified
06 Apr 2016 08:21
URI

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