Greed and fear in downstream R&D games

Artikel

The aim of this paper is to investigate the firms' incentives to engage in process R&D under vertical industrial setting, when the raising rivals' cost effect is present. We show that R&D investment of the downstream duopoly firm raises the rival's marginal costs of production. The downstream R&D behavior can give rise to the symmetric investment games, i.e., the prisoner's dilemma, the deadlock game and the harmony game, between downstream competitors. If the costs of the R&D investments made by the downstream firms are large enough, the downstream firms can participate in the harmony game, which results in the investment hold-up or the creation of the R&D-avoiding cartel. For more R&D-efficient downstream firms, the downstream investment game can end up in the prisoner's dilemma or the deadlock game. In the prisoner's dilemma, both downstream firms invest in R&D, but such a behavior is not Pareto optimal. In the prisoner's dilemma, greed and fear make firms invest in R&D. In the deadlock game, both downstream firms invest in R&D, and such a behavior is Pareto optimal. The R&D investments are not induced by any social tension (greed or fear).

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Journal: Decyzje ; ISSN: 2391-761X ; Volume: 32 ; Year: 2019 ; Pages: 63-76 ; Warsaw: Kozminski University

Klassifikation und Themen

• Klassifikation: Wirtschaft
• Thema: Research and development ; investments ; prisoner’s dilemma ; deadlock game ; harmony game

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Karbowski, Adam
• Ereignis: Veröffentlichung
• (wer): Kozminski University
• (wo): Warsaw
• (wann): 2019

Weitere Informationen

• DOI: doi:10.7206/DEC.1733-0092.131
• Handle: http://hdl.handle.net/10419/214735
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ