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Competitiveness and R&D competition revisited

  • Matsumura, Toshihiro
  • Matsushima, Noriaki
  • Cato, Susumu

This paper formulates a duopoly model of firms concerned with relative profits as well as their own profits and investigates the relationship between the degree of competitiveness in a market and R&D expenditure. We find a non-monotone relationship between the two variables. When the duopoly market is not particularly competitive and when it is highly competitive, R&D activities are intensified. Thus, we are able to obtain similar results to both the pro-competitive and the Schumpeterian views in a single framework. We also discuss the welfare implications of changing competitiveness and consider cases of oligopoly and R&D cooperation as extensions to our basic model.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 31 (2013)
Issue (Month): C ()
Pages: 541-547

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Handle: RePEc:eee:ecmode:v:31:y:2013:i:c:p:541-547
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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