R&D in transport and comunication in a Cournot duopoly
We analyse R&D activity in transport and communication technology (TCRD), in a Cournot duopoly. Transport and communication costs are of the iceberg type, i.e., using up some portion of the product along its path to the final buyer. Firms invest in TCRD to increase the net amount of the product that reaches consumers. A variety of equilibria arise as a result of the different levels of TCRD efficiency. If TCRD’s productivity is high, the game is a prisoner’s dilemma where both firms invest in TCRD. As the e¢ciency of the TCRD progressively fades we come across first a chicken game and, then, at lower e¢ciency, a game with an equilibrium in dominant strategies where the profits are at the highest. Social welfare is maximised by market strategies only when TCRD is very efficient.
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- Lambertini, Luca & Poddar, Sougata & Sasaki, Dan, 1998.
"Standardization and the stability of collusion,"
Elsevier, vol. 58(3), pages 303-310, March.
- LAMBERTINI, Luca & PODDAR, Sougata & SASAKI, Dan, "undated". "Standardization and the stability of collusion," CORE Discussion Papers RP 1325, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- L. Lambertini & S. Poddar & D. Sasaki, 1997. "Standardization and the Stability of Collusion," Working Papers 298, Dipartimento Scienze Economiche, Universita' di Bologna.
- Luca Lambertini & Sougata Poddar & Dan Sasaki, 1997. "Standardization and the Stability of Collusion," CIE Discussion Papers 1997-14, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- 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.Full references (including those not matched with items on IDEAS)
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