Firm Conduct in a Duopolistic Industry with Product Innovation

Jacek Prokop ()

Chapter Chapter 16 in Advances in Quantitative Economic Research, 2022, pp 217-228 from Springer

Abstract: Abstract The objective of this paper is to investigate the firm conduct in a model of duopolistic industry with product innovation and price competition. Three different scenarios (industry-wide competition, R&D cooperation, and industry-wide cartel) are compared in a two stage game of firms. It is shown that independent of the extent of research spillovers and the level of product differentiation, the duopolists have strong incentives to form a full industry cartel that results in the highest level of R&D investments (in comparison to research cooperation and industry-wide competition) as long as the extent of research spillovers is not too low.

Keywords: R&D investments; Product innovation; Price competition; Coopetition; Industry cartel (search for similar items in EconPapers)
JEL-codes: L13 O32 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-98179-2_16

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DOI: 10.1007/978-3-030-98179-2_16

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