Quarterly Journal of Economics Vol. 98 No. 4 1983
Noncooperative Oligopoly and Preemptive Innovation Without Winner-Take-All
Abstract
Earlier models of innovation under oligopolistic rivalry are modified to include a “share parameter” σ, describing the manner in which profits are divided among rivals when one firm is successful in its search for a valuable resource stock. There is a unique value of σ that maximizes expected industry profits, by “guiding” noncooperative oligopolists to choose the profit-maximizing exploration rate. Moreover, setting σ at this maximizing value—which always allocates some share of industry profits to the “losers” in the exploration race—leads to an exploration rate identical to what would be chosen by a jointly managed cartel.
- DOI
- 10.2307/1881783
- Volume
- 98
- Issue
- 4
- Pages
- 681
- Sources
- openalex crossref