Game analysis for cooperative behavior based on knowledge spillovers with complete information

A concept of mixed knowledge spillovers is proposed. Features of cooperation in research and development (R and D) are analyzed with mixed knowledge spillovers for a duopoly in the same industry. Game theory is adopted and AJ model is used as the basis of the research. A duopoly sustains competition in the production market yet may select to cooperate or not in their R and D. A three-phase model is brought out. Cooperation and non-cooperation in R and D are analyzed. Some conclusions are acquired: largest knowledge spillovers level will happen with R and D cooperation and the opposite result will happen with R and D non-cooperation. The effect in R and D, output and profit will be higher in R and D cooperation.