A sequential model of R&D investment over an unbounded time horizon
Management Science
Dynamic patent races with risky choices
Management Science
STACS'99 Proceedings of the 16th annual conference on Theoretical aspects of computer science
Optimal investment in development projects
Operations Research Letters
Expenditure patterns and timing of patent protection in a competitive R&D environment
Operations Research Letters
On closed-form solutions of a resource allocation problem in parallel funding of R&D projects
Operations Research Letters
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The paper considers a race among multiple firms that compete over the development of a product. The first firm to complete the development gains a reward, whereas the other firms gain nothing. Each firm decides how much to invest in developing the product, and the time it completes the development is a random variable that depends on the investment level. The paper provides a method for explicitly computing a unique Nash equilibrium, parametrically in the interest rate; for a given interest rate, the Nash equilibrium is determined in time that is linear in the number of firms. The structure of the solution yields insights about the behavior of the participants. Furthermore, an explicit expression for a unique globally optimal solution is obtained and compared to the unique Nash equilibrium.