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Multi-market competition, R&D, and welfare in oligopoly

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  • Akio Kawasaki
  • Ming Hsin Lin
  • Noriaki Matsushima

Abstract

We investigate a multi-market Cournot model with strategic process R&D investments wherein a multi-market monopolist meets entrants that enter one of the markets. We find that entry can enhance the total R&D expenditure of the incumbent firm. That is, entry can stimulate R&D effort. Moreover, the incumbent's profit nonmonotonically changes as the number of entrants increases. Depending on the fixed entry costs and R&D technologies, both insufficient and excess entrycan appear.

Suggested Citation

  • Akio Kawasaki & Ming Hsin Lin & Noriaki Matsushima, 2010. "Multi-market competition, R&D, and welfare in oligopoly," ISER Discussion Paper 0796, Institute of Social and Economic Research, Osaka University.
  • Handle: RePEc:dpr:wpaper:0796
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    File URL: http://www.iser.osaka-u.ac.jp/library/dp/2010/DP0796.pdf
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    References listed on IDEAS

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    1. Okuno-Fujiwara, Masahiro & Suzumura, Kotaro, 1993. "Symmetric Cournot Oligopoly and Economic Welfare: A Synthesis," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(1), pages 43-59, January.
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    Cited by:

    1. Wang, Qi & Zhang, Chunyu & Ding, Yi & Xydis, George & Wang, Jianhui & Ƙstergaard, Jacob, 2015. "Review of real-time electricity markets for integrating Distributed Energy Resources and Demand Response," Applied Energy, Elsevier, vol. 138(C), pages 695-706.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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