Technology sharing cartels and industrial structure

Abstract The effects of “technology sharing cartels” on the behavior of firms and industrial structure are analyzed. Unit production costs are assumed to decrease with experience, which at any given time is proportional to the total production accumulated until that time. The “learning by doing” process is examined in a context of a duopolistic market, modeled as an infinite horizon dynamic game, for which subgame perfect (feedback) Nash equilibria are sought. Both symmetric and asymmetric oligopolies are examined. Since the models are non-linear and intractable by analytical techniques, equilibria are computed by using a computational procedure based on a policy iteration method.