R&D competition, absorptive capacity, and market shares

This paper deals with an oligopolistic industry where firms are engaged in cost-reducting R&D activity to maximize their market shares. The existence and uniqueness of a feedback-Nash-optimal R&D strategy for each firm are discussed. Our simulations highlight that variations in spillovers hardly influence the firms' R&D investment, if their absorptive capacities to exploit extramural knowledge depend on their R&D efforts. Moreover, extramural knowledge cannot completely replace in-house R&D. However, a high level of public R&D favors the firm with the most restrictive R&D expenditure constraint and/or with the lowest initial R&D stock, provided it invests in R&D.     

More on subsidizing cooperative and noncooperative R&D in duopoly with spillovers

In an earlier article in this journal I compared two R&D-stimulating policies: allowing for R&D cooperatives and providing direct R&D subsidies (see Hinloopen, 1997:Journal of Economics 66: 151–175). I also considered the implementation of both policies simultaneously. Since then Amir (1998: Discussion Paper 1/1998, Odense University) has shown that the model I used as a starting point (i.e., that of d'Aspremont and Jacquemin, 1988:American Economic Review 78: 1133–1137) is not well-defined with respect to a crucial parameter (the technological spillover) and subsequently proposes an augmentation of the model. Replicating then my original analysis with this augmented model reveals that all results stated before remain valid. In addition I correct a minor error in Hinloopen (1997) related to the comparison of optimal R&D subsidies.     

Cooperation and the efficiency of regional R&D activities

This paper investigates the relationship between the cooperativebehaviour of manufacturing establishments in a region and theefficiency of their R&D activities, using data for 11 Europeanregions. Some significant differences in the attitude towardsR&D cooperation as well as with regard to the efficiencyof R&D activities between the regions can be found. However,these two issues appear to a large degree to be empiricallyunrelated. Therefore, the role of R&D cooperation in regionalinnovation systems remains unclear.     

R&D spillovers and productivity: Evidence from U.S. manufacturing microdata

This paper deals with the estimation of the impact of technology spillovers on productivity at the firm level. Panel data for American manufacturing firms on sales, physical capital inputs, employment and R&D investments are linked to R&D data by industry. The latter data are used to construct four different sets of `indirect' R&D stocks, representing technology obtained through spillovers. The differences between two distinct kinds of spillovers are stressed. Cointegration analysis is introduced into production function estimation. Spillovers are found to have significant positive effects on productivity, although their magnitudes differ between high-tech, medium-tech and low-tech firms. First version received: April 1997/final version received: April 1999     

The Long-Run Growth Effects of R&D Subsidies

This article presents a generalized versionof Howitt's (1999) model of R&D-driven growth withoutscale effects and a complete characterization of the long-rungrowth effects of R&D subsidies. R&D subsidiescan either promote or retard long-run economic growth, and surprisingly,the growth-retarding outcome occurs for a wide range of plausibleparameter values. This article also presents a new intuitiveexplanation for why R&D subsidies can have long-rungrowth effects (both positive and negative).     

Strategic timing in R&D agreements

We study the endogenous formation of R&D agreements in a R&D/Cournot duopoly model with spillovers where also the timing of R&D investments is endogenous. This allows us to consider the incentives for firms to sign R&D agreements over time. It is shown that, when both R&D spillovers and investment costs are sufficiently low, firms may find difficult to maintain a stable agreement due to the strong incentive to invest noncooperatively as leaders. In this case, the stability of an agreement requires that the joint investment occurs at the initial stage, thus avoiding any delay. When spillovers are sufficiently high, the coordination of R&D efforts becomes a profitable option, although firms may also have an incentive to sequence noncooperatively their investment over time. Finally, when spillovers are asymmetric and knowledge mainly leaks from the leader to the follower, investing as follower may become extremely profitable, making R&D agreements hard to sustain unless firms strategically delay their joint investment in R&D.     

Multistage R&D competition and patent policy

In this paper a model of multistage R&D patent policy is investigated. We study the impact of the duration of patent protection for intermediate products on R&D races when the discovery of the final product requires the accomplishment of an intermediate step. Using a multistage model where firms choose their levels of research investment at each stage, we find all subgame-perfect equilibria of the game. We also determine how competition affects a firm's level of research investment at different stages of the R&D competition.     

Demand-Creating R&D in a Symmetric Oligopoly

Spillovers with demand-creating research and development (R&D) activities are investigated by revisiting a widely employed market share rivalry demand structure. Positive technological spillovers may inflict positive or negative side effects on rivals and this has important implications for the effects on innovative efforts of loose or tight R&D cooperation in symmetric oligopolies. A comparison with the effects that apply with linear demand structures and implications for empirical research are also touched upon.     

Biodiversity and Optimal Policies Towards R&D and the Growth of Genetically Modified Crops

In this paper we provide a simple model illustrating the possible nature ofgovernment policy with regards to genetic modification, taking into accountits impact on the environment. We show that it is necessary not only tointervene in the growing of crops, but also to intervene in R&D througha tax on the adoption of new GM technology. Without intervention at bothlevels, both the cultivation of GM crops and the rate of innovation in GM willexceed their socially optimal levels.     

Research Joint Ventures with Asymmetric Spillovers and Symmetric Contributions

The paper proposes a new type of R&D cooperation between firms endowed with asymmetric spillovers, which we call symmetric Research Joint Venture (RJV) cartelization, based on reciprocity in information exchange. In this setting, firms coordinate their R&D expenditures and also share information, but such that the asymmetric spillover rates are increased through cooperation by equal amounts. It is found that this type of cooperation reduces R&D investment by the low spillover firm when its spillover is sufficiently low and the spillover of its competitor is sufficiently high. But it always increases the R&D of the high spillover firm, as well as total R&D (and hence effective cost reduction and welfare). A firm prefers no cooperation to symmetric RJV cartelization if its spillover rate is very high and the spillover rate of its competitor is intermediate. The profitability of symmetric RJV cartelization relative to other modes of cooperation is analyzed. It is found that symmetric RJV cartelization constitutes an equilibrium for a very wide range of spillovers, namely, when asymmetries between spillovers are not too large. As these asymmetries increase, the equilibrium goes from symmetric RJV cartelization, to RJV cartelization, to R&D competition, to R&D cartelization.     

Endogenous spillovers and incentives to innovate

Summary. We present a new approach to endogenizing technological spillovers. Firms choose levels of a cost-reducing innovation from a continuum before they engage in competition for each other's R&D-employees. Successful bids for the competitor's employee then result in higher levels of cost reduction. Finally, firms enter product market competition. We apply the approach to the long-standing debate on the effects of the mode of competition on innovation incentives. We show that incentives to acquire spillovers are stronger and incentives to prevent spillovers are weaker under quantity competition than under price competition. As a result, for a wide range of parameters, price competition gives stronger innovation incentives than quantity competition. Received: February 1, 1999; revised version: November 14, 2001     

Technology,Exports And Firm Efficiency In Taiwanese Manufacturing

Using firm-level data from the 1986 Census of Manufactures of Taiwan, we examine the links between technical efficiency and firm investments in technology and exports. Stochastic production frontier techniques are used to estimate the technical efficiency of firms by investments in technology as well as by export orientation. Our results indicate that accounting for firm investments in technology is critical in explaining the strong export-productivity link in the extant literature. For the group of large, high technology firms, the differences in the mean efficiencies between exporters and non-exporters are not significantly different than zero in all nine industries under study. However, for the large number of small firms that make no formal investments in technology. exporters are significantly closer to the production frontier than their counterparts that sell in the domestic market.     

Synergizing independent and cooperative R&D activities: the effects of organisational slack and absorptive capacity

Firms undertaking independent and cooperative research and development (R&D) activities simultaneously often have difficulties to realise their synergistic effects. This study contends that such difficulties are caused by tensions between two types of R&D activities in terms of resource competition and knowledge leakage. Moreover, organisational slack and absorptive capacity may affect these tensions and thereby play important role in synergizing independent and cooperative R&D activities. Based on a survey data of 286 firms, this study finds that such two types of R&D activities jointly have a negative impact on firm performance. Furthermore, organisational slack aids in synergizing them, while absorptive capacity has an adverse impact. These findings enrich our knowledge on the interrelation of independent and cooperative R&D activities and shed light on how firms can synergize them.     

Product innovation: testing the relative influence of industry,institutional context and firm factors

This article analyses the influence of industry characteristics (concentration and technological opportunity), the institutional framework (social capital and spillovers from the public sector) and some firm factors (external and internal R&D) on product innovation in a unique integrated framework. Based on a sample of Spanish industrial firms, these variables were found to be positively related to firms’ product innovation. Also, results show that in institutional environments with significant levels of social capital and spillovers, firms change their innovation strategy focusing on external R&D.     

International technological spillovers from ICT‐producing manufacturing industries: a panel data analysis

This paper examines the effect of the international diffusion of technological capacity from ICT sectors on the total factor productivity in developed countries. Special attention is paid to the construction of a more recent and homogeneous industry‐level data set using unit value ratios and a hedonic price index. A cointegration analysis is performed on this annual panel data for 10 manufacturing sectors in six OECD countries over the period 1979–2001.

On the basis of our results, we may conclude that a country receives more international technology spillovers in its manufacturing industries the closer its relations with more technologically advanced nations are and the more open it is to imports. Meanwhile, information and communication technologies developed abroad increase the total factor productivity of each of the manufacturing sectors of a country, and this effect is enhanced where ICT goods are imported from nations with advanced technology of this kind.