出版社：Suntory Toyota International Centres for Economics and Related Disciplines
摘要：This paper analyses a dynamic game of investment in R&D or advertising, where current investments change future market conditions. It investigates whether under- investment can be supported in equilibrium by the threat of escalation in investment outlays. When there are no spillovers, or there is full patent protection, underinvestment equilibria are shown to exist even though, by deviating, a firm can get a persistent strategic advantage. When there are strong spillovers and weak patent protection, underinvestment equilibria fail to exist. This implies that weaker patent protection can actually lead to more investment in equilibrium. Furthermore, potential entry is introduced into the model so as to address issues of market structure. It is shown that underinvestment equilibria can be stable with respect to further entry, independently of market size and entry cost. Finally, the "nonfragmentation" result of statis stage games (Shaked and Sutton, 1987) is proved to hold in this dynamic game. That is, fragmented outcomes cannot be suppoorted in any equilibrium, no matter how large the market, and despite the existence of under-investment equilibria
关键词：Dynamic game; investment; collusion; industry structure
