Symmetric Cournot Oligopoly and Economic Welfare: A Synthesis
Masahiro Okuno-Fujiwara () and
Kotaro Suzumura ()
Discussion Paper Series from Institute of Economic Research, Hitotsubashi University
Recently, Mankiw-Winston  and Suzumura-Kiyono  have shown that socially excessive firm entry occurs in unregulated oligopoly. This paper extends this "excess entry" results by looking into strategic aspects of cost-reducing R&D investment that creates incentives towards socially excessive investments. In the first stage, firms decide whether or not to enter the market. In the second stage, firms make a commitment to cost-reducing R&D investment. In the thrid stage, firms compete in output quantities. It is shown that the excess entry holds even in the presence of strategic commtiments.
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Journal Article: Symmetric Cournot Oligopoly and Economic Welfare: A Synthesis (1993)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hituec:a242
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