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Competitiveness and R&D competition revisited

Toshihiro Matsumura (), Noriaki Matsushima and Sususmu Cato ()

Economic Modelling, 2013, vol. 31, issue C, 541-547

Abstract: This paper formulates a duopoly model of firms concerned with relative profits as well as their own profits and investigates the relationship between the degree of competitiveness in a market and R&D expenditure. We find a non-monotone relationship between the two variables. When the duopoly market is not particularly competitive and when it is highly competitive, R&D activities are intensified. Thus, we are able to obtain similar results to both the pro-competitive and the Schumpeterian views in a single framework. We also discuss the welfare implications of changing competitiveness and consider cases of oligopoly and R&D cooperation as extensions to our basic model.

Keywords: competitiveness; innovation; Schumpeterian view; pro-competitive view (search for similar items in EconPapers)
JEL-codes: L21 O31 L13 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1016/j.econmod.2012.12.016

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