Investment in transport and communication technology in a cournot duopoly with trade

Luca Lambertini () and G. Rossini

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We investigate the role of R&D investment in transport and communication (TCRD) in a Cournot duopoly with trade. Our analysis suggests that firms may invest in TCRD at reasonable levels of efficiency of TCRD even when they do not maximize their aggregate payoffs, i.e., when the game is a prisoner`s dilemma. As we consider countries of different size, it appears that for low levels of efficiency of TCRD only small countries invest. Welfare effects suggest that investing in TCRD is superior for the country that understands it. The terns of trade improve as the foreign market gets larger and, in some cases, if the foreign firms invest in TCRD.

Date: 2001
New Economics Papers: this item is included in nep-int
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Journal Article: Investment in transport and communication technology in a Cournot duopoly with trade (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:407

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