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Strategic R&D policy in a quality-differentiated industry with three exporting countries

Author Info

  • Jinji, Naoto
  • Toshimitsu, Tsuyoshi

Abstract

We examine strategic research and development (R&D) policy for quality-differentiated products in a third-market 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 optimal unilateral policy for the highest-quality exporting country depends on the mode of competition. Various cases of policy coordination by exporting countries are also examined.

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Article provided by Elsevier in its journal Japan and the World Economy.

Volume (Year): 28 (2013)
Issue (Month): C ()
Pages: 132-142

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Handle: RePEc:eee:japwor:v:28:y:2013:i:c:p:132-142
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505557

Keywords: Strategic trade and industrial policy; R&D subsidy/tax; Vertical differentiation; Triopoly;

Find related papers by 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
  • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
  • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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Cited by:

  1. Julien Berthoumieu & Viola Lamani, 2016. "Vertical Differentiation, Uncertainty, Product R&D and Policy Instruments in a North-South Duopoly," Working Papers hal-01285559, HAL.

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