Q6. [25 marks] Two firms are interested in undertaking Research and Development (R&D) to create a...
Q6. [25 marks] Two firms are interested in undertaking Research and Development (R&D) to create a new drug. If one firm undertakes R&D and the other doesn't, the firm undertaking the R&D is likely successful and gets a net return of $40m in the following year; but corporate espionage means the other firm gains some information and is able to make some improvements which lead to a $10m increase in the following year. If both firms undertake R&D then rivalry...