Dynamics of technology sharing cartels and industrial structure under a rule of thumb

We analyse the market effects of different degrees of knowledge transfer in a duopoly in which firms act following a rule of thumb. Three regimes are compared: the technology sharing cartels, the duopoly with spillovers, and the proprietary regime. We show the industrial structure evolution of these three regimes under different cost configurations when firms behave myopically, revising their production plan in each period according to the marginal profit previously gained. The analysis is conducted in a discrete setting using numerical simulations of finite difference systems. We show under which conditions knowledge transfer is beneficial to the system and can prevent market monopolisation.