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. DOI 10.6092/unibo/amsacta/697.
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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
DOI
Deposit date
17 Jun 2004
Last modified
17 Feb 2016 14:01
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