| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5054867 | Economic Modelling | 2013 | 5 Pages |
This paper proposes a procurement mechanism for a research and development (R&D) project, in which the stochastic nature of R&D is incorporated, and the potential agents needed to invest prior to the agent are selected. The incentive contract aims to attract the investment of potential agents through a sharing rate. By establishing the stopping time game, an optimal investing strategy for potential agents is derived. Furthermore, the investment equilibria are discussed, and the conditions under which the equilibrium represents preemption or simultaneous investment are presented.
⺠The procurement mechanism for a research and development (R&D) project is proposed. ⺠The advantage of the mechanism is the avoidance of the risk in R&D research. ⺠The effects of sharing rate on potential agents' investment strategy are analyzed. ⺠The equilibrium strategy of the potential agent is obtained.
