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Strategic R&D Policy in a Quality-Differentiated Industry with More than Two Exporting Countries

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  • Naoto Jinji
  • Tsuyoshi Toshimitsu

Abstract

In this paper, we examine strategic R&D policy for quality-differentiated products in a thirdmarket trade model. We extend the previous work by adding a third exporting country, so that the market structure is international triopoly. We show that the presence of the third exporting country affects strategic R&D policies. With three exporting countries, the lowest-quality exporting country gains from taxing domestic R&D and the middle-quality exporting country gains from subsidizing domestic R&D under both Bertrand and Cournot competition. As in the duopoly case, however, the unilaterally optimal policy for the highest-quality exporting country depends on the mode of competition. Various cases of policy coordination by exporting countries are also examined.

Suggested Citation

  • Naoto Jinji & Tsuyoshi Toshimitsu, 2010. "Strategic R&D Policy in a Quality-Differentiated Industry with More than Two Exporting Countries," Discussion papers e-09-001, Graduate School of Economics Project Center, Kyoto University.
    • Handle: RePEc:kue:dpaper:e-09-001
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    References listed on IDEAS

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    More about this item

    Keywords

    strategic trade policy; R&D subsidy/tax; vertical differentiation; oligopoly;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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