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Growth in a Differentiated Oligopoly with Product Innovation

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  • R. Cellini
  • L. Lambertini
  • I. P. Ottaviano

Abstract

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.

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  • R. Cellini & L. Lambertini & I. P. Ottaviano, 1999. "Growth in a Differentiated Oligopoly with Product Innovation," Working Papers 363, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:363
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    References listed on IDEAS

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