<scp>R</scp>&<scp>D</scp> Strategy in International Mixed Duopoly with Research Spillovers

<jats:p>This paper examines the international mixed duopoly behaviour with research spillovers. Using a two‐stage game with Research and Development (<jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content>) and output, we investigate the effects of imperfectly appropriable <jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content> on optimal <jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content> strategies of a domestic public firm and a foreign private firm across different market interactions: (i) international <jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content> competition, (ii) only the foreign firm conducts <jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content>, (iii) only the domestic public firm conducts <jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content>, (iv) no firm conducts <jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content>, and (v) research joint venture. The results show that firms' research performances are determined by the degree of spillovers and the optimal <jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content> strategies involve <jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content> competition. Spillovers are shown to be socially beneficial and their absence can prove to be a strategic deterrent, with the public firm monopolising the market. Some of these findings contrast with the traditional models of oligopoly (with or without <jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content>) and mixed oligopoly (without <jats:styled-content style="fixed-case">R</jats:styled-content>&<jats:styled-content style="fixed-case">D</jats:styled-content>).</jats:p>