Price vs Quantity in a Duopoly with Technological Spillovers: A Welfare Re-Appraisal

Luca Lambertini () and Andrea Mantovani

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We analyse the problem of the choice of the market variable in a model where firms activate R&D investments for process innovation. We establish that (i) firms always choose the Cournot behaviour; and (ii) there exists a set of the relevant parameters where a benevolent social planner prefers quantity setting to price setting. This happens when the marginal cost of R&D activities is relatively low while technological externalities are relatively high. In this situation, the conflict between social and private preferences over the type of market behaviour disappears.

Date: 2000
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (2)

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Working Paper: Price vs quantity in a duopoly with technological spillovers: a welfare re-appraisal (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:389

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