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: L13 L21 O31 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (110)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:31:y:2013:i:c:p:541-547

DOI: 10.1016/j.econmod.2012.12.016

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