Three essays on strategic R&D investment

R&D and entry deterrence. We analyze the strategic role of cost-reducing R&D as an entry deterrent. We consider a game with the following timing. In the first stage, incumbent firms facing a potential entrant that has access to the incumbent's initial production technology, conduct cost reducing R&D. In the second stage, after observing the incumbents' R&D outcomes, the potential entrant decides whether to enter. In the third stage, firms engage in Cournot competition. If the R&D is (not) costly, entry is accommodated (blockaded). If the R&D is moderately costly, entry is effectively impeded. In some cases, potential competition leads the incumbents to socially inefficient R&D choices.; Joint R&D and reduction of technological diversity. Firms' cooperation in pre-competitive R&D may reduce technological diversity among firms. In this paper we analyze this aspect of cooperative R&D. Two firms in a Cournot or Bertrand duopoly can agree to cooperate in R&D, in which case they share the cost and outcome of the R&D. Alternatively, firms conduct R&D independently and do not share the cost or the outcome. We find that under a stochastic R&D process, cooperation may yield a lower level of expected profit and social welfare than noncooperation. When the firms engage in Cournot competition, R&D cooperation occurs (does not occur) between firms with high (low) R&D productivity. Sometimes noncooperation yields a higher level of expected profit but a lower level of expected welfare than cooperation. When the firms engage in Bertrand competition, R&D cooperation does not occur.; Cooperation in strategic investment games: A survey. We provide the survey of the theoretical and empirical literature on R&D cooperation to shed some light on this issue and try to assess where we are. We start with the review of economic theory on R&D cooperation (nature of innovative activity, spillovers, reduction of technological diversity resulting from information sharing, and policy issues). We then review empirical analysis on R&D cooperation. We conclude the paper with suggestions for future research agendas.