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.
|Date of creation:||2003|
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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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- 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.
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- Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
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