Optimal research for Cournot oligopolists (Q1088873)

The purpose of this paper is to find the optimal amount of research for Cournot oligopolists facing demand uncertainty. The presented model is similar to those of Clarke, Gal-Or, Novshek-Sonnenschein and Sakai in the second stage game of output decision. However, it goes beyond these previous papers, taking the research decision as endogenous in the first stage game. It is shown that the amount of research undertaken by the oligopoly can be inefficient even when the number of firms gets quite large.