Open Innovation in a dynamic Cournot duopoly |
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| Institution: | 1. Düsseldorf Institute for Competition Economics (DICE), Gebäude 24.31, Universitätsstr. 1, 40225 Düsseldorf, Germany;2. Department of Economics, University of Bologna, Strada Maggiore 45, 40125 Bologna, Italy;3. ENCORE, Economics Network for Competition and Regulation, University of Amsterdam, Roetersstraat 11, WB1018 Amsterdam, The Netherlands;4. MEMOTEF, Department of Methods and Models for Economics, Territory and Finance, Sapienza University of Rome, Via del Castro Laurenziano 9, 00161 Rome, Italy;1. Center for Quantitative Economics, Jilin University, Changchun, Jilin 130012, PR China;2. School of Business, Jilin University, Changchun, Jilin 130012, PR China;1. Department of Statistics and Operations Researches, College of Science, King Saud University, P.O. Box 2455, Riyadh 11451, Saudi Arabia;2. Department of Mathematics, Faculty of Science, Mansoura University, Mansoura 35516, Egypt |
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| Abstract: | In recent years Open Innovation (OI) processes have been receiving growing attention from the empirical and theoretical economic literature, where a debate is taking place on the aspects of complementarity or substitutability between internal R&D and OI spillover. By means of a differential game approach, we analyze the case of substitutability in an OI setup in a Cournot duopoly where knowledge spillovers are endogenously determined via the R&D process. The game produces multiple steady states, allowing for an asymmetric solution where a firm may trade off the R&D investment against information absorption from the rival. The technical analysis and the numerical simulations point out that the firm which commits to a higher level of OI absorption produces a smaller output and enjoys higher profits than its rival. |
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