A Differential Game with Investment in Transport and Communication R&D
We analyse R&D activity in transport and communication technology (TCRD) in a different game where firms compete, alternatively, in quantities or pricies. Transport and communications costs are of the iceberg type. Firms invest in the TCRD to increase the net amount of the product that reaches consumers. We derive subgame perfect equilibria, and show that price competetion yealds the socially optimal investment, while Cournot competition involves excess investment and lower outputs.
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- 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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- Lambertini, Luca & Rossini, Gianpaolo, 2006. "Investment in transport and communication technology in a Cournot duopoly with trade," Japan and the World Economy, Elsevier, vol. 18(2), pages 221-229, March.
- 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.
- 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.