International Journal of Business and Economics Volume 19, No. 1 June, 2020

R&D Expenditure in a Competitive Landscape: A Game Theoretic Approach

Salman Ali

Strategic Management Area Indian Institute of Management Shillong, India

Syed Mizanur Rahman

Informatik Area Technische Universit?t Kaiserslautern, Germany

Abstract

A firm's R&D (Research & Development) expenditure is dependent on the competitive environment and the industry structure it operates in. The purpose of this paper is to understand the drivers of a firm's R&D that are related to the industry structure and to predict the nature of R&D expenditure incurred by firms in different scenarios. We scroll through the extant literature on various game theoretic models related to R&D expenditure in different contexts before coming up with a conceptual model that can be tested and developed further. We anticipate this framework can be useful to understand as well as to forecast the R&D spending pattern at the level of individual firms and for a whole industry. Apart from its contribution to literature, we also discuss some prospective managerial and policy implications of this model.

Keywords：R&D (Research & Development), Industry Structure, Conceptual Model, Game Theory, Symmetric Model, Asymmetric Model.

JEL Classifications：C79, L13, O32, O39.

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