A small firm leads to curious outcomes: Social surplus, consumer surplus, and R&D activities
AbstractThis paper investigates an asymmetric duopoly model with a Hotelling line. We find that helping a small (minor) firm can reduce both social and consumer surplus. This makes a sharp contrast to existing works showing that helping minor firms can reduce social surplus but always improves consumer surplus. We also investigate R&D competition. We find that a minor firm may engage in R&D more intensively than a major firm in spite of economies of scale in R&D activities.
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Bibliographic InfoPaper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0742.
Date of creation: Jun 2009
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-03 (All new papers)
- NEP-COM-2009-07-03 (Industrial Competition)
- NEP-INO-2009-07-03 (Innovation)
- NEP-MIC-2009-07-03 (Microeconomics)
- NEP-TID-2009-07-03 (Technology & Industrial Dynamics)
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