Real options game models of R&D competition between asymmetric firms with spillovers

Using real options game models, we consider the characterization of strategic equilibria associated with an asymmetric Research and Development (R&D) race between an incumbent firm and an entrant firm in the development of a new innovative product under market and technological uncertainties. The random arrival time of the discovery of the patent protected innovative product is modeled as a Poisson process. Input spillovers on the R&D effort are modeled by the change in the leader’s hazard rate of success of innovation upon the follower’s entry into the R&D race. Asymmetry between the two competing firms include sunk costs of investment, stochastic revenue flow rates generated from the product, and hazard rates of arrival of success of R&D efforts of the two firms. Under asymmetric duopoly, we obtain the complete characterization of the three types of Markov perfect equilibria (sequential leader–follower, preemption and simultaneous entry) of the firms’ optimal R&D entry decisions with respect to various sets of model parameters. Our model shows that under positive input spillover, preemptive equilibrium does not occur in the R&D race due to the presence of dominant second mover advantage. The two firms choose optimally to enter simultaneously if the sunk cost asymmetry is relatively small; otherwise, sequential equilibrium would occur. When the initial hazard rate is low relative to the level of input spillover, simultaneous entry would occur as an optimal decision, signifying another scenario of dominant second mover advantage. On the other hand, when the initial hazard rate is sufficiently high so that the first mover advantage becomes more significant, simultaneous equilibrium does not occur even under high level of positive input spillover.     

Measuring Intersectoral Spillovers: French Evidence

In this paper, we measure the effect of internal R&D and various spillover concepts on productivity growth, using a database for France that covers the period 1978–92. Three spillover concepts are distinguished: rent spillovers related to investment goods; rent spillovers related to intermediate goods; pure knowledge spillovers. When production is measured by gross output, all three spillover concepts yield positive and statistically significant coefficients. Each concept has a measurable effect on technological progress at the sectoral level.     

WHY IS THERE A LACK OF EVIDENCE ON KNOWLEDGE SPILLOVERS FROM FOREIGN DIRECT INVESTMENT?

Empirical analyses of knowledge spillovers from foreign direct investment (FDI) offer mixed results; they find positive, neutral and negative FDI spillover effects. This lack of evidence mainly comes from the results of firm‐level panel data analysis. This is important since this approach seems to be the most appropriate for estimating FDI spillovers. The paper takes a look at recent substantive and methodological developments in FDI spillover analysis, which have brought some more optimistic results with regard to FDI spillovers, and can help in further development in this field. The main substantive development relates to the introduction of a broad variety of sources of firm heterogeneity (foreign affiliates as well as local firms) in the analysis. Others include differentiation between vertical (inter‐industry) and horizontal (intra‐industry) spillovers, and host country absorptive capacity for knowledge spillovers. Methodological developments relate to distinguishing between technological/knowledge and productivity spillovers, improvement of modelling and estimation methods, and an increased amount and quality of data.     

Managerial overconfidence,overinvestment, and R&D spillover

This paper examines whether a firm will select an overoptimistic manager when a cost‐reduction investment has a spillover effect. We consider a Cournot competition model where R&D investment ex ante occurs before the process of product market competition. Our analysis reveals that there exists a unique and symmetric equilibrium for firms to delegate overoptimistic managers. We show that only when the spillover effect is sufficiently high do firms benefit from delegation. Furthermore, the equilibrium confidence level and investment decision first decrease and then increase as the spillover parameter changes. As the initial production cost increases, the equilibrium performance becomes worse.     

基于海外投资商与东道国动态博弈的税收风险研究

海外投资商遭受的东道国税收风险对投资成败具有关键影响作用,如何更好地规避税收风险,实现海外投资收益最大化,是投资者面临的难题。在综合考虑海外投资商对东道国本地企业的技术溢出效应和竞争效应基础上,构建海外投资商与东道国之间的动态博弈框架,分析海外投资商与东道国的策略互动,寻求海外投资商应对税收风险的最优投资策略。研究结果表明：东道国政府通常会给予海外投资商特定免税期,不过达到稳定状态后,均衡税率和海外投资商的资本存量会受技术溢出影响。     

供应链技术溢出影响因素及其作用机制——基于供应链自组织过程的多案例研究

在市场竞争逐渐转变为供应链之间竞争的背景下,为提高供应链的竞争能力,供应链节点企业间的合作必将不断深化,由此,在供应链内部发生技术溢出现象就成为必然。因此,解析供应链技术溢出影响因素及其作用机制,对供应链管理研究具有重要意义。本文以大连市日资企业与本土企业构成的两组典型供应链为例,对不同阶段的技术溢出影响因素进行归纳,并应用自组织理论解析其作用机制,进而建立供应链技术溢出影响因素作用机制模型。     

The risk spillover between China’s economic policy uncertainty and commodity markets: Evidence from frequency spillover and quantile connectedness approaches

Based on the frequency spillover method extended by Baruník and Křehlík (2018), we explore the risk spillover relationship between China’s economic policy uncertainty (CNEPU) and commodity futures in different frequency domains with daily settlement price data of 14 commodity futures in China. The results show that the risk spillover relationship between CNEPU and the commodity market mainly occurs in the short term. Quantile connectedness results show that economic policy uncertainty, which mainly plays the role of risk transmitter, is more closely related to the commodity market during the market boom and recession. Soybeans, soybean meal, and corn have shown high investment value in the process of market recovery, which is exposed to less risk spillover from policy uncertainty. Finally, the economic crisis with different characteristics will have specific impacts on asymmetric risk spillovers based on certain impact mechanisms.     

The effect of spillovers on the provision of local public goods

This paper analyzes the provision of local public goods with positive spillovers across jurisdictions. If spillovers are symmetric, the non-cooperative game played by jurisdictions admits a unique equilibrium, and an increase in spillovers reduces the total provision of public goods. Smaller jurisdictions always reduce their contribution, but larger jurisdictions can increase their contribution. When spillovers are asymmetric, equilibrium is unique if spillovers are low, while multiple equilibria exist for high spillover values. In the case of two jurisdictions, an increase in the flow of spillovers to one jurisdiction benefits agents from that jurisdiction but harms agents in the other jurisdiction. Beyond the case of two jurisdictions, the effect of changes in spillovers cannot be signed. An increase in the spillovers flowing to a jurisdiction can actually result in an increase in the supply of public goods by that jurisdiction and harm agents residing in it, while benefiting agents in the other jurisdictions. The results of the paper reveal the complexity of interactions that will plague the design of institutions for multijurisdictional local public good economies with spillovers.      

Publish or teach? Analysis of the professor's optimal career path

This paper analyzes how faculty members dynamically allocate their efforts between improving their research and teaching skills, taking into account the organizational structures and incentives implemented by academic institutions. The model builds on the assumption that organizational structures have an impact on the nature of spillover effects between teaching and research competencies. We analyze the dynamic equilibrium under unilateral and bilateral spillovers, using the no-spillover case as a benchmark. The bilateral spillover case is the most appealing as it achieves the highest overall performance; however, the nature of the equilibrium and the career paths can be quite different depending on the parameters of the problem such as the obsolescence of competencies or the strength of the spillover effect. This finding provides interesting insights on what could be the most productive configuration of a higher education institution.     

FDI技术溢出机理及影响因素探析

文章探讨了FDI技术溢出机理,分别就水平溢出效应和垂直溢出效应的传导机制进行了分析,并指出了影响FDI技术溢出效应的因素,包括东道国吸收能力与技术差距、市场竞争与跨国公司投资动机。还从产业引进与培育、制度建设及人才战略等方面提出了建议,以更好发挥FDI技术溢出效应,促进我国技术进步。     

Effects of One-Way Spillovers on Market Shares, Industry Price, Welfare, and R & D Cooperation

With one-way spillovers, the standard symmetric two-period R&D model leads to an asymmetric equilibrium only, with endogeneous innovator and imitator roles. We show how R&D decisions and measures of firm heterogeneity—market shares, R&D shares, and profits—depend on spillovers and on R&D costs. While a joint lab always improves on consumer welfare, it yields higher profits, cost reductions, and social welfare only under extra assumptions, beyond those required with multidirectional spillovers. Finally, the novel issue of optimal R&D cartels is addressed. We show an optimal R&D cartel may seek to minimize R&D spillovers between its members.     

In search of FDI horizontal spillovers in China: evidence from meta-analysis

Quality & Quantity - This paper contributes to the literature on foreign direct investment (FDI) technology spillover effects, focusing on horizontal spillovers from foreign firms to their...     

Environmental regulations in private and mixed duopolies: Taxes on emissions versus green R&D subsidies

In this article, we compare two kinds of environmental regulations—emissions taxes and green R&D subsidies—in private and mixed-duopoly markets in the presence of R&D spillovers. We show that a green R&D subsidy is better (worse) than an emissions tax when the green R&D is efficient (inefficient), irrespective of R&D spillovers, whereas the existence of a publicly owned firm encourages the government to adopt a subsidy policy. We also show that the optimal policy choice depends on R&D efficiency and spillovers. In particular, when green R&D is inefficient and the spillover rate is low (high), the government should choose an emissions tax and (not) privatize the state-owned firm. When green R&D is efficient, however, an R&D subsidy is better, but a privatization policy is not desirable for society, irrespective of spillovers.     

Measuring Intersectoral Technology Spillovers: Estimates from the European and US Patent Office Databases

This paper presents several new methods for measuring intersectoral knowledge spillovers, and applies these methods in an analysis of productivity growth in manufacturing for a cross-country, cross-sectional sample for the 1980s. It is argued that existing methods of measuring such intersectoral knowledge spillovers are mostly aimed at measuring so-called crent spillovers'. The methods developed here are aimed at measuring knowledge spillovers—an additional aspect of the spillover process. The empirical analysis shows that there are indeed differences between these two types of spillover measure.     

Public infrastructure investment,output dynamics,and balanced budget fiscal rules

We study the dynamic macroeconomic effects of public infrastructure investment under a balanced budget fiscal rule, using an overlapping generations model of a small open economy. The government finances public investment by employing distortionary labor taxes. The balanced budget rule implies a negative short-run output multiplier that exceeds (in absolute terms) the positive long-run output multiplier. Larger public capital spillovers sharpen the intertemporal output tradeoff. In contrast to conventional results regarding public investment shocks, we obtain dampened cyclical responses for plausible parameter values. The cyclical dynamics arise from the interaction between the labor tax rate, the tax base, and the intergenerational spillover effects. We show that financing scenarios involving public debt creation can substantially reduce the short-run output contraction and the transitional macroeconomic fluctuations induced by public investment.     

Analyzing quantile spillover effects among international financial markets

This paper investigates the quantile-based spillover effects among 17 stock markets from January 1993 to January 2022, utilizing a quantile approach based on the variance decomposition of a quantile vector autoregression (QVAR) model. Compared with the traditional mean-based spillover measures, this new quantile approach allows for a nuanced investigation of spillovers at every quantile and capture spillovers under extreme events. The results show that: (1) the total spillover is high and exhibits strong time-varying characteristics, and the tail spillover is higher and more complex in scale and direction; (2) the spillover at each quantile level shows an upward trend, especially during the 2008 crisis and the COVID-19 epidemic; (3) developed countries (or regions) are the net exporters of stock market spillovers, while the developing countries are the net importers; and (4) the 17 stock markets constitute different local financial networks, which may be related to economic conditions and geographical location.     

外商直接投资在中国的空间外溢效应研究

本文的研究结果发现,除了国外直接投资对大型企业不存在空间外溢比邻优势外,国外直接投资对中、小型企业以及港澳台地区直接投资对所有规模的企业均存在一定的空间外溢比邻优势;外商直接投资拉大了东西部企业生产率的差距,其中港澳台地区直接投资对东西部大型企业的生产率外溢差异远大于国外直接投资,港澳台地区直接投资分布相对集中于东部以及其对大型企业表现出的比邻优势使其外溢效应出现明显的区域差异,这是导致东西部生产率差异的主要因素;外商直接投资对不同规模的企业具有不同的外溢效应,加剧了我国大、小企业之间的竞争地位差异。     

Spillovers of currency carry trade returns,market risk sentiment,and U.S. market returns

This paper examines the link between spillovers of currency carry trade returns and U.S. market returns. Following Tse and Zhao (2012), this paper hypothesizes that the magnitude of spillovers of currency carry trade returns is positively correlated with market risk sentiment and, therefore, has an impact on market returns. Using the G10 currencies and S&P 500 index futures, the empirical results present a high magnitude of spillover effects of currency carry trade markets. The empirical findings also show a significantly positive relationship between spillovers of currency carry trade returns and subsequent market returns. Furthermore, the results indicate that this relationship is stronger in bear markets than in bull markets. Finally, our findings show that spillovers of currency carry trade returns significantly affect the subsequent transition probabilities of market returns.     

Spillovers between sovereign CDS and exchange rate markets: The role of market fear

As important variables in financial market, sovereign credit default swaps (CDS) and exchange rate have correlations and spillovers. And the volatility spillovers between the two markets become further complicated with the effect of market fear caused by extreme events such as global pandemic. This paper attempts to explore the complex interactions within the “sovereign CDS-exchange rate” system by adopting the forecast error variance decomposition method. The results show that there is a relatively close linkage between the two markets and the total spillover index of the system is dynamic. For most of the past, the exchange rate has a higher spillover effect on the sovereign CDS than vice versa. Moreover, after the market fear variables are introduced, the “sovereign CDS-exchange rate” system and market fear variables present bidirectional spillovers. The results of the study have particular significance for maintaining the financial stability and preventing risk contagion between markets.     

Industrial and Spatial Spillovers and Productivity Growth: Evidence from Taiwan High-Technology Plant Level Data

The purpose of this paper is to recognize the importance of innovation networks and incorporate various types of knowledge and spatial spillovers and their associated adjustments on productivity growth. We explore the temporal, spatial, and industrial/sectoral spillovers using a dynamic external spillover model that assumes each firm derives an optimal plan such that the expected present value of current and future cost streams is minimized. The goal is to measure and evaluate various types of spillover mechanisms, which allow us both to quantify their cost effects and evaluate the contribution of such inter-dependencies on productive performance.JEL Classification: D2, L6, O3