Growth in a Differentiated Oligopoly with Product Innovation
We present a two-sector model where oligopolistic firms sell differentiated products. New products are introduced over time through formal R&D activity. Market competition takes place either a la Cournot or a la Bertrand. We show that tougher competition associated wit price-setting behavior does not entail a larger social welfare as long as it requires more effort for the production of the final goods.
|Date of creation:||Oct 1999|
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