Economics Working Paper Archive at WUSTL
Выпуск N0303006 за 2002 год
Опубликовано на портале: 03-05-2005Joseph Farrell, Richard J. Gilbert, Michael L. Katz Economics Working Paper Archive at WUSTL. 2002. No. 0303006.
We examine the effects of market structure and the internal organization of firms on equilibrium R&D projects. We compare a monopolist’s choice of R&D portfolio to that of a welfare maximizer. We next show that Sah and Stiglitz’s finding that the market portfolio of R&D is independent of the number of firms under Bertrand competition extends to neither Cournot oligopoly nor a cartel. We also show that the ability of firms to pre-empt R&D by rivals along particular research paths can lead to socially excessive R&D diversification. Lastly, using Sah and Stiglitz’s definition of hierarchy, we establish conditions under which larger hierarchies invest in smaller portfolios.