Optimal R&D Investment Strategy Under the Uncertainty of Patent Competition and Imitation - Comparison Between Symmetric and Asymmetric R&D Game Models -

In this paper, we reconstructed the R&D competition of two firms into a probabilistic model of patent acquisition using game theory, and we conducted sensitivity analysis with respect to the probability of the firm’s patent acquisition and the change in the probability of imitation. This study categorized the expected profit of the two competing firms and the change in the R&D incentives by scenario, proposing an advantageous competition strategy for each firm that is competing in a symmetric or an asymmetric R&D environment. As a result, the comparison between the symmetric R&D competition model and the asymmetric R&D competition model shows that the firm with a comparative advantage has a higher incentive to invest in R&D in a symmetric R&D environment, and a symmetric R&D investment would put them in an advantageous position. On the other hand, the firms without a comparative advantage would have a higher incentive to invest in an asymmetric R&D investment model regardless of the probability of patent acquisition, which makes them strategically advantageous to engage in an asymmetric R&D competition.