Endogenous transportation technology in a Cournot differential game with intraindustry trade

Luca Colombo, Luca Lambertini and Andrea Mantovani ()

Japan and the World Economy, 2009, vol. 21, issue 2, pages 133-139

Abstract: We investigate a dynamic Cournot duopoly with intraindustry trade, where firms invest in R&D to reduce the level of iceberg transportation costs. We adopt both open-loop and closed-loop equilibrium concepts, showing that a unique (saddle point) steady state exists in both cases. In the open-loop model, optimal investments and the resulting efficiency of transportation technology are independent of the relative size of the two countries. On the contrary, in the closed-loop case firms' R&D incentives are driven by the relative size of the two countries. Policy implications are also evaluated.

Keywords: R&D; Differential; games; Transport; and; communication; costs; Intraindustry; trade (search for similar items in EconPapers)
Date: 2009

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Related works:
Working Paper: Endogenous Transportation Technology in a Cournot Differential Game with Intraindustry Trade (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:eee:japwor:v:21:y:2009:i:2:p:133-139

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