Strategic Product R&D Investment Policy under International Rivalry in the Presence of Demand Spillover Effects

Tsuyoshi Toshimitsu

International Economic Journal, 2014, vol. 28, issue 2, 293-309

Abstract: We develop a model of product (i.e., quality-improving) research and development (R&D) investment competition in a horizontally differentiated duopoly. In particular, based on a third-country market model, we consider the optimal product R&D investment policy under international rivalry in the presence of demand spillover effects associated with improving the quality level of a product. We show how the optimality of a non-cooperative and a cooperative R&D investment policy depends on the strength of demand spillover effects. Furthermore, we consider the same issues in the case of heterogeneous consumers and alternative utility functions.

Date: 2014
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Working Paper: Strategic product R&D investment policy under international rivalry in the presence of demand spillover effects (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:intecj:v:28:y:2013:i:2:p:293-309

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DOI: 10.1080/10168737.2014.905619

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