Startups and Upstarts
Disadvantageous Information in R&D
Bibliographic Data
| ID | 10177481 |
|---|---|
| Authors | Yu Awaya (0000-0002-7813-9542, University of Rochester), Vijay Krishna (0000-0002-6169-5622, Pennsylvania State University) |
| Year | 2020 |
| Volume | 129 |
| Issue | 2 |
| Pages | 534-569 |
| Publication date | 2020-10-05 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/711953 |
| OpenAlex | W3092347661 |
| Language | EN |
| Citations received | 1 |
| References cited | 14 |
We study an R&D race between an established firm and a startup under asymmetric information. R&D investment brings success stochastically, but only if the innovation is feasible. The only asymmetry is that the established firm has better information about the feasibility of the innovation. We show that there is an equilibrium in which the poorly informed startup wins more often, and has higher expected profits, than the better-informed incumbent. When the informational asymmetry is large, this is the unique equilibrium outcome. The channel by which better information becomes a competitive disadvantage appears to be new and stems from the fact that better information dulls the incentive to learn from one's rival
Disadvantage · Economics · Incentive · Industrial organization · Information asymmetry · Investment (military · Microeconomics · Outcome (game theory · Perfect information · Computer Science · Digital Platforms and Economics · Economic Growth and Productivity · Innovation Policy and RD
| Unique citing works | 1 |
|---|---|
| Citations per year | 1 |
| Citation span | 2025 - 2025 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 1 |