We analyze an R&D race in which, in each period, two firms each choose which of two research projects to invest in. Each observes the other's past choices and so strategic search is possible. Equilibrium is efficient if the projects differ only in their probability of being the "right" project. If they differ in other dimensions (e.g., cost), then there may be too much or too little duplication relative to the social optimum.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics