University–firm competition in basic research: Simultaneous versus sequential moves

Abstract

This paper studies the endogenous timing of moves in a game with competition in basic research between a university and a commercial firm. It examines the conditions under which the two entities end up investing in innovation at equilibrium, both under simultaneous and sequential moves. It argues that when the innovation process is not too costly, under any timing, the firm conducts research despite the opportunities for complete free‐riding. The two sequential move games with either player as leader emerge as equilibrium endogenous timings, with both entities realizing higher profits in either outcome than in a simultaneous move game. Each entity also profits more by following than by leading. Finally, as a proxy for a welfare analysis, we compare the propensities for innovation across the three scenarios and find that university leadership yields a superior performance. This may be used as a selection criterion to choose the latter scenario as the unique outcome of endogenous timing.

Commercialization of academic patents in Chinese universities: Antecedents and spatial spillovers

“…Research activities in a general university can be divided into two categories: basic research and applied research. In the operational definition of basic research investment, the proportion of university basic research expenditures (PBR) is used as the measurement index [ 65 ]. This indicator is obtained by calculating the percentage of basic research expenditures for scientific research expenditures in the total research expenditure of universities.…”

Asymmetric Reimbursement and Contingent Fees in Environmental Conflicts: Observable vs. Unobservable Contracts

“…However, the results are, in some circumstances, inconclusive as some researchers find total contributions in a contribution game are higher in sequential move games [26], while others find contributions are lower in sequential move games [27,28]. As with the Tullock-type contests, these previous studies have not investigated environmental conflicts, but specific economic market impacts and how contribution games are altered under various game theoretic conditions [25][26][27][28][29][30].…”

“…Although these are not studies related to environmental conflicts, there are studies analyzing the economic inefficiency of contests based on rent dissipation using contest models: [21][22][23][24]. Several papers also study the role of sequential and/or simultaneous moves in a game [25][26][27][28][29][30]. This research investigate the impact of moving simultaneously versus sequentially [25][26][27][28][29], how ordering moves affects the equilibrium outcome [30], how sequential moves can lead to higher payoffs in the market [25], how investments in innovation are impacted by the movement in a game [29], how second movers can do better than first movers when switching to a sequential move game [30], how sharing information can alter a game's outcome [31], and how a contribution game is impacted by sequential moves [26][27][28].…”

“…Several papers also study the role of sequential and/or simultaneous moves in a game [25][26][27][28][29][30]. This research investigate the impact of moving simultaneously versus sequentially [25][26][27][28][29], how ordering moves affects the equilibrium outcome [30], how sequential moves can lead to higher payoffs in the market [25], how investments in innovation are impacted by the movement in a game [29], how second movers can do better than first movers when switching to a sequential move game [30], how sharing information can alter a game's outcome [31], and how a contribution game is impacted by sequential moves [26][27][28]. These researchers find that firm profit can be increased by moving later in the game [25], innovation investments lead to higher profits for each player in sequential move games [29], how a second-mover advantage can occur [30], and how changing a game to sequential move can lead to different contributions in a contribution game [26][27][28].…”

Endogenous leadership and sustainability of enhanced cooperation in a repeated interactions model of tax competition: Endogenous leadership in tax competition

“…Concerning the issue of endogenous timing, Hamilton and Slutsky (1990) and Amir (1995) examined the order of play in two‐player games by adding an initial stage at which players simultaneously decide whether to move Early or Late . This framework has been broadly applied in various fields of economics (e.g., Amir & Stepanova, 2006; Amir et al, 2021; and van Damme & Hurkens, 1999 for duopoly settings, and Eichner, 2014; Hindriks & Nishimura, 2015, 2017; and Kempf & Rota‐Graziosi, 2010, 2015 for tax competition). Kempf and Rota‐Graziosi (2010) question the assumption that governments compete for mobile capital in a simultaneous‐move Nash equilibrium when they select their tax rates.…”