Private and Social Incentives Towards Investment in Product Differentiation

Roberto Cellini and Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We consider a dynamic oligopoly where firms invest to increase product differentiation and an externality effect operates in the R&D activity. We compare the steady state solutions under alternative decision rules, namely, the open-loop and the closed-loop Nash equilibrium. Significant differences emerge, concerning the effect of the number of firms upon the optimal degree o product differentiation. We also compare the private optima with the social optimum, and derive implications concerning the social desirability of different decision rules.

Date: 2002
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: PRIVATE AND SOCIAL INCENTIVES TOWARDS INVESTMENT IN PRODUCT DIFFERENTIATION (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:431

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