@article {5799,
	title = {Greed and Fear in Downstream R\&D Games},
	journal = {Decyzje},
	year = {2019},
	month = {12/2019},
	pages = {63-76},
	abstract = {The aim of this paper is to investigate the fi rms{\textquoteright} incentives to engage in process R\&D under vertical industrial setting, when the raising rivals{\textquoteright} cost effect is present. We show that R\&D investment of the downstream duopoly fi rm raises the rival{\textquoteright}s marginal costs of production. The downstream R\&D behavior can give rise to the symmetric investment games, i.e., the prisoner{\textquoteright}s dilemma, the deadlock game and the harmony game, between downstream competitors. If the costs of the R\&D investments made by the downstream fi rms are large enough, the downstream fi rms can participate in the harmony game, which results in the investment hold-up or the creation of the R\&D-avoiding cartel. For more R\&D-effi cient downstream fi rms, the downstream investment game can end up in the prisoner{\textquoteright}s dilemma or the deadlock game. In the prisoner{\textquoteright}s dilemma, both downstream fi rms invest in R\&D, but such a behavior is not Pareto optimal. In the prisoner{\textquoteright}s dilemma, greed and fear make fi rms invest in R\&D. In the deadlock game, both downstream fi rms invest in R\&D, and such a behavior is Pareto optimal. The R\&D investments are not induced by any social tension (greed or fear).},
	issn = {1733-0092},
	doi = {10.7206/DEC.1733-0092.131}
}
