The Asymmetric Investment Game Strategy Utilizing R&D incentives with Patent

This paper examines asymmetric R&D investment decision strategies with patent for two competing firms. Our focus is placed on establishing cost functions with varying investment costs for competing firms. In particular, we consider a strategic decision making process for these firms where one is with a relatively higher brand image or cost functions and the other with low investment cost through non-infringing imitation. In this study, we develop a strategic competition model through game theory. Our findings are as follows: (1)If non-infringing imitation is less likely, bilateral R&D competition under patent protection tends to create higher strategic R&D incentives for R&D cooperation than independent R&D investment. (2)Under patent protection, technology licensing creates higher R&D incentives for both firms when compared with the without-licensing situations.