Allocating resources to research and development projects in a competitive environment

Firms who are involved in R&D activities are often “racing” against competitors to become the first to attain the desired breakthrough. The goal might indeed be to “beat” the competitors in as many such R&D races as possible. However, when resources are limited, and competitors' budget allocation to these R&D activities unknown, the challenge becomes to devise a method of allocating R&D budgets to activites in a strategically “optimal” way. We …