New Publication in experimental innovation economics: Does Sequential Decision-Making Trigger Collective Investment in Automobile R&D? Experimental evidence

So far, experimental methods have hardly been used in innovation economics

In the paper by Tobias Buchmann, Alexander Haering, Muhamed Kudic and Michael Rothgang, the authors use an experimental approach to analyse the factors which determine research cooperation of firms in the automotive industry. The paper has just been published in the series ‘Ruhr Economic Papers’ of the RWI - Leibniz-Institute for Economic Research e.V.


We conduct a framed laboratory experiment to gain in-depth insights on factors that drive collective research and development efforts among firms located along the automotive value chain. In particular, we employ a public goods experiment and analyze the influence of sequential decision-making on the willingness to engage in cooperation and on economic welfare. By using a linear value chain setting with three suppliers and one OEM, we analyze vertical R&D cooperation. Our results reveal that contributions increase in situations with sequential decision-making and that sequential decisions increase the overall welfare, even in case of unequally distributed R&D budgets.


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RWI Ruhr Economic Papers