Price vs Quantity in a Duopoly with Technological Spillovers: A Welfare Re-Appraisal
We analyse the problem of the choice of the market variable in a model where firms activate R&D investments for process innovation. We establish that (i) firms always choose the Cournot behaviour; and (ii) there exists a set of the relevant parameters where a benevolent social planner prefers quantity setting to price setting. This happens when the marginal cost of R&D activities is relatively low while technological externalities are relatively high. In this situation, the conflict between social and private preferences over the type of market behaviour disappears.
|Date of creation:||2000|
|Contact details of provider:|| Postal: Piazza Scaravilli, 2, and Strada Maggiore, 45, 40125 Bologna|
Phone: +39 051 209 8019 and 2600
Fax: +39 051 209 8040 and 2664
Web page: http://www.dse.unibo.it
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Glenn C. Loury, 1979.
"Market Structure and Innovation,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 93(3), pages 395-410.
- F. Delbono & V. Denicolo, 1988.
"Incentives to Innovate in a Cournot Oligopoly,"
44, Dipartimento Scienze Economiche, Universita' di Bologna.
- James A. Brander & Barbara J. Spencer, 1983.
"Strategic Commitment with R&D: The Symmetric Case,"
Bell Journal of Economics,
The RAND Corporation, vol. 14(1), pages 225-235, Spring.
- Bester, H. & Petrakis, E., 1991.
"The Incentives for Cost Reduction in a Differentiated Industry,"
1991-36, Tilburg University, Center for Economic Research.
- Bester, Helmut & Petrakis, Emmanuel, 1993. "The incentives for cost reduction in a differentiated industry," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 519-534.
- Bester, H. & Petrakis, E., 1991. "The Incentives for Cost Reduction in a Differentiated Industry," Papers 9136, Tilburg - Center for Economic Research.
When requesting a correction, please mention this item's handle: RePEc:bol:bodewp:389. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dipartimento Scienze Economiche, Universita' di Bologna)
If references are entirely missing, you can add them using this form.