Template-Type: ReDIF-Paper 1.0
Author-Name: Gianluca Femminis
Author-X-Name-First: Gianluca
Author-X-Name-Last: Femminis
Author-Email: gianluca.femminis@unicatt.it
Author-Workplace-Name: DISCE, Università Cattolica
Author-Name: Gianmaria Martini
Author-X-Name-First: Gianmaria
Author-X-Name-Last: Martini
Author-Email: gianmaria.martini@unibg.it
Author-Workplace-Name: Università di Bergamo
Title:  Spillovers, disclosure lags, and incentives to innovate. Do oligopolies over-invest in R&D?
Abstract:  We develop a dynamic duopoly, where firms have to take into account a technological externality, 
that reduces over time their innovation costs, and an inter-firm spillover, that lowers only the second comer's R&D cost. 
This spillover exerts its effect after a disclosure lag. We identify three possible equilibria, which are classified, according to the timing of R&D investments, 
as early, intermediate, and late. The intermediate equilibrium is subgame perfect for a wide parameters range. 
When the innovation size is large, it implies that the duopolistic market equilibrium involves underinvestment. 
Hence, even in presence of a moderate degree of inter-firms spillover, the competitive equilibrium calls for public policies aimed at increasing the research activity. 
When we focus on minor innovations -- the case in which, according to the earlier literature, the market equilibrium underinvests -- our results imply that the policies
 aimed at stimulating R&D have to be less sizeable than suggested before, despite the presence of an inter-firm spillover.
Length: nn pages 39
Creation-Date: 2007-06
Publication-Status: none
File-URL: http://www.unicatt.it/Istituti/TeoriaEconomica/Quaderni/Quaderno_44.pdf
File-Format: Application/pdf
File-Function: First version, 2007
Number: itemq0744
Classification-JEL: L13, L41, O33
Keywords: knowledge spillover, dynamic oligopoly
Handle: RePEc:ctc:serie6:itemq0744