This paper constructs an ex-ante asymmetric R&D Cournot differential game with knowledge spillovers. It shows that in the long-run equilibrium firms have incentives to innovate as long as the knowledge externalities are bidirectional. We also carry out a series of numerical simulations of the...

This paper shows that innovation (or Schumpeter's) cycles can be demonstrated in a discrete and finite dynamic game of innovation and imitation. We find that the cycles depend crucially on whether imitation is a credible threat and hence, we conclude that strategic interactions are sufficient to...