R&D Incentives under Bertrand Competition: A Differential Game

Roberto Cellini and Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We investigate dynamic R&D for process innovation in an oligopoly where firms invest in cost-reducing activities. We focus on the relationship between R&D intensity and market structure, proving that the industry R&D invest- ment monotonically increases in the number of firms. This result contradicts the established wisdom acquired from static games on the same topic. We also prove that, if competition is suficiently tough, any increase in product substitutability reduces R&D efforts.

Date: 2004
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Related works:
Journal Article: R&D INCENTIVES UNDER BERTRAND COMPETITION: A DIFFERENTIAL GAME (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:519

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