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Investment in transport and communication technology in a cournot duopoly with trade

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  • L. Lambertini
  • G. Rossini

Abstract

We investigate the role of R&D investment in transport and communication (TCRD) in a Cournot duopoly with trade. Our analysis suggests that firms may invest in TCRD at reasonable levels of efficiency of TCRD even when they do not maximize their aggregate payoffs, i.e., when the game is a prisoner`s dilemma. As we consider countries of different size, it appears that for low levels of efficiency of TCRD only small countries invest. Welfare effects suggest that investing in TCRD is superior for the country that understands it. The terns of trade improve as the foreign market gets larger and, in some cases, if the foreign firms invest in TCRD.

Suggested Citation

  • L. Lambertini & G. Rossini, 2001. "Investment in transport and communication technology in a cournot duopoly with trade," Working Papers 407, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:407
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    References listed on IDEAS

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    1. Freund, Caroline L. & Weinhold, Diana, 2004. "The effect of the Internet on international trade," Journal of International Economics, Elsevier, vol. 62(1), pages 171-189, January.
    2. L. Lambertini & A. Mantovani & G. Rossini, 2001. "R&D in transport and comunication in a Cournot duopoly," Working Papers 401, Dipartimento Scienze Economiche, Universita' di Bologna.
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    5. Barbara J. Spencer & James A. Brander, 1983. "International R & D Rivalry and Industrial Strategy," Review of Economic Studies, Oxford University Press, vol. 50(4), pages 707-722.
    6. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    7. Gene M. Grossman (ed.), 1992. "Imperfect Competition and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262570939, January.
    8. Martin, Philippe & Rogers, Carol Ann, 1995. "Industrial location and public infrastructure," Journal of International Economics, Elsevier, vol. 39(3-4), pages 335-351, November.
    9. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February.
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    Cited by:

    1. Colombo, Luca & Lambertini, Luca & Mantovani, Andrea, 2009. "Endogenous transportation technology in a Cournot differential game with intraindustry trade," Japan and the World Economy, Elsevier, vol. 21(2), pages 133-139, March.
    2. R. Antonietti & D. Antonioli, 2007. "Production offshoring and the skill composition of Italian manufacturing firms A quasi-experimental analysis," Working Papers 593, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. G. Rossini & L. Vici, 2007. "Vertical integration, disintegration and ability to export," Working Papers 592, Dipartimento Scienze Economiche, Universita' di Bologna.
    4. Gianpaolo Rossini & Paolo Zanghieri, 2008. "What Drives Price Differentials of Consumables in Europe? Size? Affluence? Or Both?," Open Economies Review, Springer, vol. 19(1), pages 121-134, February.
    5. Bacchiega, Emanuele & Randon, Emanuela & Zirulia, Lorenzo, 2012. "Strategic accessibility competition," Research in Economics, Elsevier, vol. 66(2), pages 195-212.
    6. L. Colombo & L. Lambertini & A. Mantovani, 2003. "A Differential Game with Investment in Transport and Communication R&D," Working Papers 466, Dipartimento Scienze Economiche, Universita' di Bologna.

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