Research On Enterprises' R&D Behavior With Network Externality And Spillover Effect

As the development of network economy and high-tech industries, more and more products or services, such as instant messaging software, telecommunications or network services, etc. have characteristics of network externalities, that is, with the increase of users of the product or compatible products, each user obtains more utilities from consuming this product. The products or services with network externalities generally have a marked feature of the frequent update of the product or technology and innovation, R&D spillovers are relatively common. Under network externality and spillover effects, enterprises'R&D activities are different from that of traditional industries, therefore, if the optimal R&D investment policy under different environments can be found through the research on enterprises'R&D investment policies under network externalities and spillover effects, the R&D investment of enterprises, especially the high-tech enterprises, will be raised, and their core competitiveness will be enhanced.In this paper, aimed at the shortage of R&D investment from China's enterprises, especially high-tech enterprises, as well as the characteristics of their R&D investment under the condition of network externalities and spillover effects, the independent or cooperative R&D behaviors of enterprises with network externalities and spillover effects were studies, and the impacts of network externalities, compatibility, and spillover effects on the incentives and policies of enterprises'R&D were analyzed, and the optimal R&D investment policy of enterprises was found, in order to provide theoretic basis enterprises making R&D investment strategies and government making science and technology policies.The main contents of this paper are as follows.â‘ Research on enterprises'independent R&D behavior with network externalities and spillover effectsThis part contains chapter 3, "study on enterprises'independent R&D behavior with network externality and input spillover" and chapter 4, " study on enterprises'independent R&D behavior with network externality and output spillover". In this part, an expanded two-stage Hotelling model was used to study enterprises'independent R&D behavior, including single enterprise conducts R&D and both two duopoly enterprises conduct R&D simultaneously, under the condition of network externalities and input or output spillover. Furthermore, analysis of the impacts of network externalities, compatibility and R&D spillover effects on the independent R&D investment strategies was made to identify the optimal independent R&D strategy under different circumstances. It is shown that when only one enterprise conducts R&D, the profit of enterprise committing R&D will be raise, and profit of enterprise without conducting R&D will be decreased, as a result, it will be forced to conduct R&D, and the R&D investment rises with the increase of network externalities and decreases with the increase of compatibility and spillover effects; when both two duopoly enterprises conduct R&D simultaneous, both of them are reluctant to do, but they will be forced to do it due to being trapped in a "Prisoner's Dilemma", and their R&D investments decreases with the increase of spillover effects and have nothing to do with network externalities and compatibility.â‘¡Research on enterprises'cooperative R&D behavior with network externalities and spillover effectsThis part contains chapter 5, "study on enterprises'cooperative R&D behavior with network externality and input spillover" and chapter 6, " study on enterprises'cooperative R&D behavior with network externality and output spillover". In this part, on the basis of modifying the AJ or KMZ model by introducing network externalities and theory of achieved expectation equilibrium, cooperative R&D game models with network externalities and input or output spillover were development, and their cooperative R&D investment policies were studied. Furthermore, analysis of the impacts of network externalities, compatibility and R&D spillover effects on their R&D investment policies and profit as well as social welfare was made to identify the optimal independent R&D strategy under different circumstances. It is shown that cooperative R&D will not only raise enterprises'profits but also product quantity, customer surplus and social welfare due to a decrease in unit production costs, and product prices; R&D investments and profits of enterprises and social welfare increase with rise of compatibility and spillover effect, and when compatibility is big and network externalities are small, R&D investments and profits of enterprises and social welfare increase with rise of network externalities.The theoretical and methodological innovations of this paper are as follows.â‘ Different from the existing literature which applies Hotelling model to study the enterprise independent R&D behavior with output spillover, this paper studies duopoly enterprises independent R&D behavior with network externalities and input spillover in "linear market", and analyzes the impacts of network externalities, compatibility, and input spillover on their independent R&D investment strategies in order to find out the optimal independent R&D investment strategy, as a result, the R&D investments and profits of enterprises are enhanced.â‘¡Different from the existing literature which applies Hotelling model to study the enterprise independent R&D behavior of upgrading product quality or performance, this paper applies expanded two-stage Hotelling model to study duopoly enterprises independent R&D behavior of reducing production costs with network externalities and input spillover, and analyzes the impacts of network externalities, compatibility, and input spillover on their independent R&D investment strategies and profits in order to find out the optimal independent R&D investment strategy, as a result, the R&D investments and profits of enterprises are enhanced.â‘¢Different from the existing literature which applies AJ or KMZ model to study enterprises cooperative R&D behaviors with little consideration of network externalities, this paper develops cooperative R&D game models with network externalities and input or output spillover to study the cooperative R&D incentives and strategies of duopoly enterprises on the basis of modifying the AJ or KMZ model by introducing network externalities and theory of achieved expectation equilibrium, and analyzes the impacts of network externalities, compatibility, and input spillover on their independent R&D investment strategies and social welfare in order to find out the optimal cooperative R&D investment strategy, as a result, their R&D investments and profits as well as the social welfare are enhanced.