Generic technology R&D decision with technology spillover, cost difference, and bargaining power under oligopoly competition

ABSTRACT

This study constructs an oligopoly model considering generic technology R&D, analyzes the market equilibrium results under R&D cooperation and non-cooperation, explores the impacts of technology spillover, cost difference, and firm’s bargaining power, and compares the boundary conditions between R&D cooperation and non-cooperation. The results show that when the degree of technology spillover is small, the R&D firm conducts drastic R&D, resulting in a complete monopoly. The market structure and equilibrium results are influenced by the degree of technology spillover, cost difference, bargaining power, and the number of following firms. Cooperation in R&D can be considered as a Nash equilibrium in certain cases. Compared with R&D non-cooperation, R&D cooperation can lead to higher profits for firms. When the degree of technology spillover is large and the number of following firms is small, R&D cooperation yields greater consumer surplus and social welfare.

KEYWORDS:

• Technology spillover
• generic technology
• bargaining
• R&D
• oligopoly

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

This paper belongs to mathematical derivation which does not involve data availability.

Additional information

Funding

This work was supported by the [National Natural Science Foundation of China #1] under Grant [number 72332001], the [Social Science Foundation of Hebei Province in China #2] under Grant [number HB23YJ001], and the [Scientific Research Project of Hebei Higher Education Institutions of China #3] under Grant [number BJS2023027].