Firm's objective function and product and process R&D

Souresh Saha

Economic Modelling, 2014, vol. 36, issue C, 484-494

Abstract: Firms undertake different kinds of R&D activities. They do product R&D (R&D aimed at improving the quality of existing products, and creating new products). They also do process R&D (R&D aimed at lowering the cost of making existing and new products). Moreover, firms often do both product and process R&D simultaneously. As far as the objective of firms is concerned, this need not be limited to profit-maximization only. Rather, firms may have a broader objective, where they care about profits as well as consumer surplus. This paper studies effects of a firm having a general objective function (that takes into consideration both profits and consumer surplus) on its product and process R&D choices, and corresponding implications.

Keywords: General objective function; Process R&D; Product R&D; R&D subsidies (search for similar items in EconPapers)
JEL-codes: L20 O32 O33 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:36:y:2014:i:c:p:484-494

DOI: 10.1016/j.econmod.2013.08.041

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