Study On Dynamic R&D Competition In Duopoly With Incomplete Information From The Perspective Of Low Cost Strategy

Nowadays, technical innovation makes more effects on the advancement of national economic development and social progress.As the driving force of technical innovation for companies, R&D activity has been an important approach for the companies to get more competitive advantages. It's necessary to further our study for there are some differences in the companies'ability to get information, the dynamic changes of the R&D competitive environment,The article is doing research on the competition problem of the duopoly dynamic R&D. Making use of the Game Theory and the Nonlinear Dynamic Systems Theory, also taking into consideration of the three types of incomplete information of cost, market demands, rationality, this article is deeply looking into the stability conditions, equilibrium results, evolution tendency of the competition of the duopoly dynamic R&D competetion, and at the meantime, putting forward some advices for the company on R&D decision from the point of the low cost strategy.The main aspects of the research are as follows.First of all, the article is doing research on the competition problem of the duopoly R&D under the condition of not having the complete cost information. The outcome of the research reveals that, when the duopoly cost information is complete and the cost is not symmetrical, there exists only one Nash equilibrium results for the duopoly static R&D competetion. When the duopoly cost information is incomplete, there exists only one Bayesian Nash equilibrium results for the duopoly static R&D research, and in some situations, duopoly model in static state R&D competition under uncompleted costs information can turn to the static state under complete costs information. Under uncompleted costs information, R&D competition in dynamic state has a stable region.Secondly, the article analyzes duopoly model in static state R&D competition under uncompleted market demand competition. The research results state that under uncompleted information about exdogenous market demand, duopoly model in dynamic R&D competition is proportional to the newly added and the original market demands; as the dynamic R&D procedure is continuing, the newly added market demands will have bigger and bigger influence on the level of effort and equilibrium quantity of duopoly balanced R&D while the influence of original market demands is getting smaller. Under the condition when the endogenous market demand information of the companies is incomplete, the market demand has big influence on dynamic R&D competition. When the market demand is stable, dynamic R&D competition will stay on a unique equilibrium. When dynamic R&D competition is in a stable state, there will be a optimal market demand factor which can make the duopoly equilibrium profit biggest while the input level and balanced output get lager with the demand factor getting bigger. The research result also states that when the market demand is incomplete, the equilibrium R&D input level under incompletely dynamic R&D duopoly competition decrease as the rate of technology spillovers increase while the equilibrium output, profits are increasing first and decreasing then with the technology spillovers rate increasing.Thirdly, this article studies the dynamic R&D duopoly competition when rationality information is incomplete. Whether rationality made decision is in the same or different level, the bounded rational dynamic R&D duopoly competition is likely to cause chaos, bifurcation and other dynamics phenomena. It turns out that the adjusting speed of R&D input has important implications to the stability of dynamic R&D competition and over fast speed of adjustment will enable R&D competition into a state of chaos, or bifurcation. Yet, companies'early R&D competition profit increases as the speed of R&D input adjustment accelerates. Besides, adjustment speed of R&D input has obvious influence on the equilibrium time of the dynamic R&D competition. When R&D competition comes into chaos, any small changes in decision-making would give R&D competition an enormous impact in the final results of the game. The impact of technology spillovers on dynamic R&D competitive equilibrium results varies as the state of the system differs. The results also show that the use of delayed feedback control method can make a dynamic R&D competition which in a chaotic state return to steady-state.Fourth, this atical analyses the decision-making issue of R&D competition from the perspective of low cost strategy. The results show that when companies implement low cost strategies to reduce corporate marginal costs, it is beneficial to either individual companies or entire industries. Under the condition of incomplete cost information, the cost strategic companies have a greater tendency of carrying out R&D activities and have access to gain a higher equilibrium profit,. Under the condition of incomplete market demand information, the implementation of low cost strategy of companies can achieve higher levels of a equilibrium results. In particular, under the conditions of exogenous market demand, low cost strategies can not only improve companies'profits in each cycle of competition, but also effectively increase competition in continuous cycles Under condition of incomplete information about decision-making, the companies in the implementation of low cost strategies need to take the stability of dynamic R D competition into account. In a stable state, the companies are profitable to implement low cost strategy. The equilibrium R&D level and the equilibrium profits increase along with the decline of the marginal cost.