"Cooperative and noncooperative R&D in experimental duopoly markets"
C90, L13, O31
R&D, duopoly, experiment
We analyze the relation between technological spillovers and R\&D cooperation in
a duopoly experiment based on the well-known model of d'Aspremont and Jacquemin.
For scenarios without and with full spillovers, two noncooperative treatments
are run, one without and one with non-binding communication possibilities, and
one cooperative treatment, with binding contract possibilities. We find that
without technological spillovers, binding R&D contracts are needed for R&D
decisions to deviate from the subgame perfect Nash R\&D level towards the
cooperative level. With full spillovers, the possibility of non-binding
cheap-talk may suffice to move closer to R\&D cooperation.
Pre-publication pdf copy.