The world appears to be entering an era of heightened great power technological competition in areas such as artificial intelligence. This is concerning because deploying new technologies often involves private benefits and broadly distributed risks. We analyze a dynamic model of a technology competition with negative externalities. Competitors can sometimes reduce risks through a self-enforcing pact in which a laggard agrees not to pursue one kind of technology and in exchange the leader shares other technical discoveries. When the rewards from technological preeminence are high, rivals can only avoid a race if the gap between them is neither too large nor too small. Tech-sharing bargains preserve the laggard's threat to resume racing if the leader reneges, and therefore can work when the leader cannot credibly promise to simply pay the laggard not to race. We further show that tech-sharing bargains do not require perfect monitoring capability by either party.
July 1, 2022
Eoghan Stafford and Robert F. Trager