<p>This paper investigates the strategic interactions between two competing high-technology firms engaged in new product development, with a particular focus on their investment decisions. Employing a game-theoretic modeling framework, we examine how technological complementarity and cooperation costs influence firms’ choices regarding investment and collaboration. Our analysis reveals that cooperation does not universally lead to increased investment. Specifically, when the degree of technological complementarity is moderate, firms tend to invest less under cooperative arrangements than under competitive ones. Furthermore, low cooperation costs combined with high complementarity promote collaboration. In contrast, when cooperation costs are substantial, collaboration becomes favorable only when complementarity is either sufficiently low or high. Additionally, we find that a firm’s prioritization of individual profits over collective gains in cooperative settings results in underinvestment and diminished payoffs. Notably, in highly competitive environments, enhanced development capabilities may paradoxically lead to reduced profitability. These findings underscore the complex role of technological complementarity and cooperation costs in shaping innovation strategies and offer valuable insights for both corporate managers and policymakers aiming to foster collaborative innovation.</p>