Abstract
We consider a differential game of R&D competition and explore the impact of rivalry on the firms' investment behavior over time. Using closed-loop strategies and hence allowing for strategic interactions among rival firms we show that R&D spending by the individual competitor is increased due to competition in the race for priority. This leads us to argue that competitive encounters enhance R&D activities at the same time as increasing efficiency in the race for a technological breakthrough.
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Dockner, E.J., Feichtinger, G. & Mehlmann, A. Dynamic R&D competition with memory. J Evol Econ 3, 145–152 (1993). https://doi.org/10.1007/BF01213831
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DOI: https://doi.org/10.1007/BF01213831