Abstract
We analyze an R&D game of two-sided incomplete information in which firms can invest in cost reducing technology before engaging in Cournot competition. Investment is observable, but R&D outcomes are not. We focus on partial pooling equilibria in which high cost firms mimic the strategy of low cost firms, resulting in under investment in equilibrium. These equilibria generally involve mixed strategies with the novel feature that players are not indifferent among their mixed strategies due to the beliefs and subsequent actions they induce. Further results suggest that firms may be willing to pay to keep their R& D outcomes concealed.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
