A duopoly cooperative game analysis based on mixed spillovers and product differentiation

Abstract

The effect of R&D (research and development) spillovers not only depended on exogenous factors, but also constrained to endogenous factors. Thus, a concept of mixed spillovers is proposed in this paper. Based on AJ model and relaxed condition of homogeneous products, fixed R&D spillovers coefficient and symmetrical production cost, etc., the article discusses the influence of mixed spillovers and product differentiation on duopoly enterprises' equilibrium output and equilibrium profits in different cooperative states. Research shows that duopoly enterprises should do their best to improve their learning and absorption ability in order to reduce product variance rate. When the duopoly enterprises' aim is to reduce product cost, they should choose the cooperative R&D strategy, while when their aim is to maximize the equilibrium profits, the duopoly enterprises need choose compete in the marketplace, and cooperate in the R&D stage.