Asymmetry, stability and growth in a step-by-step R and D-race

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4 Citations (Scopus)

Abstract

We define a notion of stability of equilibrium in an infinitely repeated step-by-step R&D race. The unique symmetric equilibrium is shown to be unstable, and stable asymmetric equilibria arise, if product market competition is intense, firms are patient, imitation is difficult and innovations are large. Some predictions based on symmetric equilibria, e.g. that less patient firms always invest less in research, or that more intensive competition leads to higher economic growth, are reversed for "realistic" values of the underlying parameters.

Original languageEnglish
Pages (from-to)245-257
Number of pages13
JournalEuropean Economic Review
Volume47
Issue number2
DOIs
Publication statusPublished - Apr 2003

Keywords

  • Asymmetric equilibria
  • Growth
  • Stability
  • Step-by-step R and D races

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