Title

When Spillovers Enhance R&D Incentives

Article Type

Research Article

Publication Title

Journal of Quantitative Economics

Abstract

It is commonly believed that spillover reduces R&D incentives of a firm. This happens because of the appropriability problem. However, some empirical literature shows the possibility of enhanced R&D incentives under spillovers. In the literature this is explained under incomplete information, but we show this theoretically under complete information. We show in particular that in a duopoly there are situations when with no spillovers only one firm invests in R&D, but under spillovers both the firms invest. This occurs when there is complementarity in research and the spillover rate lies in an interval specified by the size of R&D investment.

First Page

857

Last Page

868

DOI

10.1007/s40953-019-00161-3

Publication Date

12-1-2019

Comments

Open Access, Green

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