R&D Equilibrium Strategies with Surfers



A typical assumption in the game-theoretic literature on research and development (R&D) is that all firms belonging to the industry under investigation pursue R&D activities. In this paper, we assume that the industry is composed of two groups; the first (the investors) is made of firms that have R&D facilities and are involved in this type of activity. The second group corresponds to firms that are inactive in R&D (the surfers). The latter group benefits from its competitors’ R&D efforts, thanks to involuntary spillovers. This division of the industry is in line with actual practice, where indeed not all firms are engaged in costly and risky R&D. We adopt a two-stage game formalism where, in the first stage investors decide on their levels of investment in R&D, and in the second stage all firms compete à la Cournot in the product market. We characterize and analyze the unique subgame perfect Nash equilibrium.


R&D Two-stage games Spillovers Cournot competition 


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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • F. Ben Abdelaziz
    • 1
  • M. Ben Brahim
    • 1
    • 2
  • G. Zaccour
    • 3
  1. 1.LARODEC Laboratory, Institut Supérieur de Gestion de TunisUniversity of TunisTunisTunisia
  2. 2.École Supérieure de Commerce de TunisUniversity La MannoubaTunisTunisia
  3. 3.Chair in Game Theory and Management, GERADMontréalCanada

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