Subsidy for New Technology Adoption in Duopoly with Differentiated Goods under Absolute and Relative Profit Maximization

Masahiko Hattori () and Yasuhito Tanaka

Journal of Economics Library, 2016, vol. 3, issue 3, 411-428

Abstract: We present an analysis about subsidy policy for adoption of new technology in duopoly with differentiated goods under absolute and relative profit maximization. Technology itself is free, however, firms must expend fixed set-up costs to adopt new technology. There are various cases about optimal policies depending on the level of the set-up cost and whether the goods of the firms are substitutes or complements. In particular, under relative profit maximization there is a case such that the social welfare is maximized when one firm adopts new technology, but no firm adopts new technology without subsidy. Then, the government should give a subsidy to only one firm. It is a discriminatory policy. The government gives a chance to receive a subsidy to only one firm.

Keywords: Subsidy for new technology adoption; Absolute and relative profit maximization; Duopoly (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.kspjournals.org/index.php/JEL/article/download/989/999 (application/pdf)
http://www.kspjournals.org/index.php/JEL/article/view/989 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ksp:journ5:v:3:y:2016:i:3:p:411-428

Access Statistics for this article

Journal of Economics Library is currently edited by Bilal KARGI

More articles in Journal of Economics Library from KSP Journals Istanbul, Turkey.
Bibliographic data for series maintained by Bilal KARGI ( this e-mail address is bad, please contact ).