Strategic R&D policy in a quality-differentiated industry with three exporting countries

Naoto Jinji and Tsuyoshi Toshimitsu

Japan and the World Economy, 2013, vol. 28, issue C, 132-142

Abstract: We examine strategic research and development (R&D) policy for quality-differentiated products in a third-market trade model. We extend the previous work by adding a third exporting country, so that the market structure is international triopoly. We show that the presence of the third exporting country affects strategic R&D policies. With three exporting countries, the lowest-quality exporting country gains from taxing domestic R&D and the middle-quality exporting country gains from subsidizing domestic R&D under both Bertrand and Cournot competition. As in the duopoly case, however, the optimal unilateral policy for the highest-quality exporting country depends on the mode of competition. Various cases of policy coordination by exporting countries are also examined.

Keywords: Strategic trade and industrial policy; R&D subsidy/tax; Vertical differentiation; Triopoly (search for similar items in EconPapers)
JEL-codes: F12 F13 L13 L52 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:28:y:2013:i:c:p:132-142

DOI: 10.1016/j.japwor.2013.09.002

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