Date of this Version
The RAND Journal of Economics
I develop a model of an R&D race with knowledge accumulation. My model does not inherit the memorylessness property of the exponential distribution that troubles existing models of R&D races. Hence, firms’ knowledge stocks are no longer irrelevant to their behavior during the R&D race, and knowledge accumulation has strategic implications. In this more general setting, I obtain results that stand in marked contrast to the previous literature. In particular, under some conditions, the firm that is behind in the race engages in catch-up behavior. This pattern of strategic interactions (action-reaction) is consistent with empirical research.
This is the peer reviewed version of the following article: Ulrich Doraszelski (2003), An R&D Race with Knowledge Accumulation, RAND Journal of Economics, 34 (1), 19 - 41, which has been published in final form at http://dx.doi.org/10.2307/3087441. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving: http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms
Doraszelski, U. (2003). An R&D Race with Knowledge Accumulation. The RAND Journal of Economics, 34 (1), 20-42. http://dx.doi.org/10.2307/3087441
Date Posted: 27 November 2017
This document has been peer reviewed.