A Differential Game with Investment in Transport and Communication R&D

L. Colombo, Luca Lambertini () and Andrea Mantovani

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We analyse R&D activity in transport and communication technology (TCRD) in a different game where firms compete, alternatively, in quantities or pricies. Transport and communications costs are of the iceberg type. Firms invest in the TCRD to increase the net amount of the product that reaches consumers. We derive subgame perfect equilibria, and show that price competetion yealds the socially optimal investment, while Cournot competition involves excess investment and lower outputs.

Date: 2003
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:466

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