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Too much R&D? - Vertical differentiation in a model of monopolistic competition

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Author Info

  • Jan Kranich

    ()
    (Leuphana Universität Lüneburg)

Abstract

This paper discusses a model of vertical an horizontal product differentiation within the Dixit-Stiglitz framework of monopolistic competition. Firns coompete not only in prices and horizontal attributes of their products, but also in the quality that can be controlled by R&D activities. Based upon te results of a general equilibrium model, intra-sectoral trade and the welfare implications of public intervention in terms of research promotion are considered. The analysis involves a numerical application to ten basic European industries.

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File URL: http://www.leuphana.de/fileadmin/user_upload/Forschungseinrichtungen/ifvwl/WorkingPapers/wp_59_Upload.pdf
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Bibliographic Info

Paper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 59.

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Length: 34 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:lue:wpaper:59

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Web page: http://leuphana.de/institute/ivwl.html

Related research

Keywords: R&D; Monopolisitc Competition; Product Differentiation;

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References

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  1. repec:fth:iniesr:430 is not listed on IDEAS
  2. Paul M. Romer, 1989. "Human Capital And Growth: Theory and Evidence," NBER Working Papers 3173, National Bureau of Economic Research, Inc.
  3. Ottaviano, Gianmarco Ireo Paolo, 1996. "Monopolistic Competition, Trade, and Endogenous Spatial Fluctuations," CEPR Discussion Papers 1327, C.E.P.R. Discussion Papers.
  4. Krugman, Paul R & Venables, Anthony J, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 857-80, November.
  5. Forslid, Rikard, 1999. "Agglomeration with Human and Physical Capital: an Analytically Solvable Case," CEPR Discussion Papers 2102, C.E.P.R. Discussion Papers.
  6. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  7. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
  8. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  9. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  10. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
  11. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
  12. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  13. J.Peter Neary, 2001. "Of Hype and Hyperbolas: Introducing the New Economic Geography," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 536-561, June.
  14. Shaked, Avner & Sutton, John, 1987. "Product Differentiation and Industrial Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 131-46, December.
  15. Jan Kranich, 2006. "The Strength of Vertical Linkages," Working Paper Series in Economics 20, University of Lüneburg, Institute of Economics.
  16. Brakman, Steven & Heijdra, Ben J., 2002. "The monopolistic competition revolution in retrospect," CCSO Working Papers 200215, University of Groningen, CCSO Centre for Economic Research.
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Cited by:
  1. Kranich, Jan, 2009. "The Formation of Urban Centers under R\&D and Spillover Externalities," Hannover Economic Papers (HEP) dp-430, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.

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