Abstract
This paper provides a more complete characterization of the welfare effects of cooperative cost-reducing R&D investments in Cournot oligopoly with spillovers. I show that R&D cooperation reduces both R&D spending and social surplus when the spillover rate in R&D is neither sufficiently high nor sufficiently low. As the elasticity of the slope of the inverse demand function increases, however, the set of spillover rates over which cooperative R&D reduces social welfare shrinks, and in the limit, cooperative R&D is socially beneficial for all spillover rates.
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I am grateful to Jay Pil Choi and Stephen Martin for valuable comments.
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Yi, SS. The welfare effects of cooperative R&D in oligopoly with spillovers. Rev Ind Organ 11, 681–698 (1996). https://doi.org/10.1007/BF00214829
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DOI: https://doi.org/10.1007/BF00214829