Managing spillovers: an endogenous sunk cost approach

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216208%3A11640%2F12%3A00384391" target="_blank" >RIV/00216208:11640/12:00384391 - isvavai.cz</a>
Result on the web
<a href="http://www.cerge-ei.cz/pdf/wp/Wp472.pdf" target="_blank" >http://www.cerge-ei.cz/pdf/wp/Wp472.pdf</a>
DOI - Digital Object Identifier
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Result language
angličtina
Original language name
Managing spillovers: an endogenous sunk cost approach
Original language description
We introduce spillover effect into John Sutton.s (1991,1998) concept of endogenous sunk costs. These sunk costs appear in the form of R&D investment into quality in our framework. We show that with spillovers increasing and the effectiveness of investment in raising quality decreasing, the Sutton lower bound on concentration for an industry decreases and ultimately collapses to zero when spillovers are large enough and/or effectiveness of investment in raising quality is low enough. In the second part,we allow firms to protect their investment against spillovers. We focus on symmetric pure strategy Nash equilibria, where all firms either protect their investment or do not protect at all. Contrary to the result with exogenous spillovers assumed in thefirst part, in the second part of the paper we show that higher ex ante spillovers and/or lower effectiveness of investment in raising quality may induce firms to protect themselves against spillovers, leading to higher investment in qual
Czech name
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Czech description
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Project
<a href="/en/project/GAP402%2F12%2F0961" target="_blank" >GAP402/12/0961: Managing R&D spillovers and IPR violation in oligopolistic markets: some theoretical and empirical considerations</a><br>
Continuities
I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year
2012
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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