Sequential Choice and R&D Racing

This paper develops a framework to analyze how choices are made when R&D competition occurs between two firms, and the aggressiveness-time tradeoffs have to be resolved in multiple stages. At issue is the way in which resources are used at each stage, i.e. are aggressiveness problems undertaken and solved (slowly) or are quick solutions adopted in an effort to get the product to market faster? We first analyze why differently positioned firms choose different targets. We focus on this translation between ex ante asymmetries between firms and ex post asymmetries in the equilibrium outcomes. Our second focus is on understanding the implications of the tradeoff between the level of aggressiveness and time spent on each stage in a multi-stage process.Innovation, Race, Competition, Strategy, Industrial Economics

Modeling Stochastic Innovation Races

We consider a firm moving towards a stochastic final destination, to be chosen from a discrete set after a decision period. The decision period itself may be deterministic or stochastic. We assume the firm can move at variable innovation (R&D) speed associated with a monotone nondecreasing variable cost, and it can also stop and move anywhere. There is a fixed cost per time unit "carried" by the firm as well, associated with keeping at the knowledge (technology) frontier. We investigate various types of the firm's optimal trajectory in the R&D race during the decision period.Innovation, Race, Competition, Strategy, Industrial Economics

Technological Races in Global Industries (Technology Races)

The starting point of our consideration on technological racing are stochastic models that view corporations as moving objects to approach a stochastic destination. A major focus is the strategic orientation of corporations in participating in such a race , revealing empirically observable phenomena such as 'catchup' and 'leapfrogging', as supported by statistical measurements. Next to the analysis of behavioural patterns on the corporate or industry level is their aggregation on a national scale that extends to racing on economic growth among (groups of) countries. A major conjecture of the paper is that technological racing patterns on a micro scale reinforce globalization and limit control of national and industry policy.

Negotiation and optimality in an economic model of global climate change

We suggest a two-country, two-sector model as a basis for the control of global climate change in which the dynamic time path of the world economy is analysed under the provision that the outcomes of a negotiation game generate the global optimal solution

SOME CRITICAL TOPICS OF ENVIRONMENTAL ECONOMICS

Environmental economics has made significant achievements over the past twenty-five years. They rest on the solid assessment that all major environmental problems and ecological disruptions are economic in character, and in need of economic tools for problem solving. This review surveys some critical issues of environmental economics, and assesses some ways to approach more satisfactory solutions for policy analysis

Economic Damage Control for Greenhouse Gas Emissions

Future emissions of trace gases are intrinsically linked to economic growth and abatement policies, which in turn, are governed by expectations of greenhouse damages. Trace gas indices that depend upon future emissions can be calculated either on the basis of emissions scenarios, such as those devised by the IPCC, or using optimal control techniques where the trade off between damages and abatement costs is made explicit. The scientific and economic issues of multiple gas abatement policies and trace gas indices are comprehensively addressed

Uncertainty, Investments and Property Rights -A Simple Exposition

The paper explores the implication of uncertain property rights for investment decision and effort level. Based on the analysis of Dixit and Pindyck (1992) for investment under uncertain returns our major result further demonstrates that when uncertain property rights are present along with uncertain returns, the trigger for entry becomes higher than the trigger derived for the case of uncertain returns only. The analysis has implications for the elimination of entry barriers and the formation of private sectors in economic transitions

Polluted and Sustainable Growth Paths

The contribution of this paper is to extend turnpike versions of optimal growth to include pollution. We introduce a pollution abatement technology which has the characteristics of a constant rate of progress toward pollution reduction. The requirements on this rate of advance in order to assure a consumption happy future are derived. Two major economic policy conclusions are drawn