Multi‐Market Competition, R&D, and Welfare in Oligopoly

Akio Kawasaki, Ming Hsin Lin and Noriaki Matsushima

Southern Economic Journal, 2014, vol. 80, issue 3, 803-815

Abstract: We investigate a multi‐market Cournot model with strategic process research and development (R&D) investments wherein a multi‐market firm meets new competitors that enter one of the markets. We show that entry can enhance the total R&D expenditures of the multi‐market firm. Moreover, the incumbent's profit nonmonotonically changes as the number of entrants increases. Depending on the fixed entry costs and R&D technologies, both insufficient and excess entry can appear. Our results imply that diversification of their products can be a useful strategy for firms.

Date: 2014
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Citations: View citations in EconPapers (4)

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https://doi.org/10.4284/0038-4038-2012.190

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Working Paper: Multi-market competition, R&D, and welfare in oligopoly (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:80:y:2014:i:3:p:803-815

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