Research and development (R&D) investment is very important for firms to gain competitive advantages and sustainable development. Due to the uncertainty of the market and competitors, R&D investment is usually costly and high risk. In such circumstances, firms not only have to figure out the optimal investment timing, but also consider whether to cooperate with competitors to share the risks and costs. In this paper, a two-stage dynamic exchange option game model is proposed for two symmetric competing firms to analyze their R&D investment decision and cooperation. The results show that under ...
