Subsidy for New Technology Adoption in Duopoly with Differentiated Goods under Absolute and Relative Profit Maximization
We present an analysis about subsidy policy for adoption of new technology in duopoly with differentiated goods under absolute and relative profit maximization. Technology itself is free, however, firms must expend fixed set-up costs to adopt new technology. There are various cases about optimal policies depending on the level of the set-up cost and whether the goods of the firms are substitutes or complements. In particular, under relative profit maximization there is a case such that the social welfare is maximized when one firm adopts new technology, but no firm adopts new technology without subsidy. Then, the government should give a subsidy to only one firm. It is a discriminatory policy. The government gives a chance to receive a subsidy to only one firm.
References listed on IDEAS
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- Yasuhito Tanaka, 2013.
"Irrelevance of the choice of strategic variables in duopoly under relative profit maximization,"
Economics and Business Letters,
Oviedo University Press, vol. 2(2), pages 75-83.
- Tanaka, Yasuhito, 2014. "Irrelevance of the choice of strategic variables in duopoly under relative profit maximization," MPRA Paper 55891, University Library of Munich, Germany.
- repec:sae:ilrrev:v:43:y:1990:i:3:p:30-51 is not listed on IDEAS
- Robert Gibbons & Kevin J. Murphy, 1990. "Relative Performance Evaluation for Chief Executive Officers," ILR Review, Cornell University, ILR School, vol. 43(3), pages 30, April. Full references (including those not matched with items on IDEAS)
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