Product and process innovation in a differentiated goods duopoly
Sammendrag
This paper compares Bertrand and Cournot equilibria in a differentiated duopoly with R&D
competition or cooperation, where R&D may affect both unit cost of production and the
size of the market. This combination of product and process innovation is shown to allow
for the reversal of some results found in earlier models that only look at one of the two
types of R&D effects. We find that for a sufficiently negative demand effect of R&D, the
Bertrand equilibrium will give the highest R&D effort. Furthermore, expanding upon
existing models, we illustrate how including demand effects of R&D and product
differentiation, increases the scope for R&D to be larger when firms cooperate in their
R&D. We also show how quantity competition in the product market is more likely to
secure greater R&D levels under cooperation between the firms than price competition
does, ceteris paribus.
Forlag
Universitetet i TromsøUniversity of Tromsø
Serie
Working paper series in economics and management, 2006, nr 8Metadata
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