Innovation Mode of an Asymmetric Duopoly with Semi-collusion

Abstract

Asymmetric mode is proposed to analyze the effects of asymmetries on R&D investment, output, profit, and social welfare in a duopoly with semi-collusion. Simulations show that the agent with lower initial cost has higher R&D expenditures, output, and profit; the agent with a higher innovation ability has higher R&D expenditure and output, while the profit depends on its spillover; under the condition of asymmetric spillover, the agent with lower spillover has lower R&D expenditure higher output and profit; when the difference of initial cost and innovation ability is lower and the two agents' spillover is close to 0 or 1, the welfare reaches high.