The Optimal R&D Ways Of Firms Under Symmetric Spillover

R&D has always been a very important social activity playing a great part in an firm's survival and development. And as all know, while innovation is the key of the development of the whole society, the firm's persistent R&D activities are its very headspring and driving force. The progress of science and technology makes R&D pressure of the firm increase day by day, more and more firms choose to cooperate on the greater project with other firms. But because of the existence of spillovers and that the whole society is a dynamic system, any firms' R&D activities are not only the variables of itself and may have substantial influence on the industry as a whole. So only under the careful considerations of other firms' reactions can any R&D programs be feasible and finally turn out to be profitable. There are admixture of cooperation and competition in R&D activities and competitive cooperation is becoming a mainstream. But how to organize R&D activities effectively, under what kind of profile to cooperate and the influence on the involved firms and the society are the main concerns of the theorists of industrial organization.On the base of classical documents, the author widely read the domestic and foreign scholars' research results on firms' R&D, then deals with a general version of two-stage model of R&D and product market competition. We provide a thorough generalization of previous results on the comparative performance of noncooperative and cooperative R&D, dispensing in particular with ex-post firm symmetry and liner demand assumptions. We also characterize the structure of profit-maximizing R&D cartels where firms competing in a product market jointly decide R&D expenditure, as well as spillover level. Finally, we have that firms prefer extremal spillovers.