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Strategic R&D Policy in a Quality-Differentiated Industry with More than Two Exporting Countries

  • Naoto Jinji
  • Tsuyoshi Toshimitsu

In this paper, we examine strategic R&D policy for quality-differentiated products in a thirdmarket trade model. We extend the previous work by adding a third exporting country, so that the market structure is international triopoly. We show that the presence of the third exporting country affects strategic R&D policies. With three exporting countries, the lowest-quality exporting country gains from taxing domestic R&D and the middle-quality exporting country gains from subsidizing domestic R&D under both Bertrand and Cournot competition. As in the duopoly case, however, the unilaterally optimal policy for the highest-quality exporting country depends on the mode of competition. Various cases of policy coordination by exporting countries are also examined.

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Paper provided by Graduate School of Economics Project Center, Kyoto University in its series Discussion papers with number e-09-001.

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Length: 33 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:kue:dpaper:e-09-001
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  5. Toshimitsu, Tsuyoshi, 2003. "Optimal R&D policy and endogenous quality choice," International Journal of Industrial Organization, Elsevier, vol. 21(8), pages 1159-1178, October.
  6. Tsuyoshi Toshimitsu & Naoto Jinji, 2008. "A Note on Strategic Trade Policy and Endogenous Quality Choice," Review of International Economics, Wiley Blackwell, vol. 16(1), pages 173-185, 02.
  7. Kyle Bagwell & Robert W. Staiger, 1989. "The Sensitivity of Strategic and Corrective R&D Policy in Battles for Monopoly," Discussion Papers 868, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  9. Zhou, Dongsheng & Spencer, Barbara J. & Vertinsky, Ilan, 2002. "Strategic trade policy with endogenous choice of quality and asymmetric costs," Journal of International Economics, Elsevier, vol. 56(1), pages 205-232, January.
  10. H. Lutz, Stefan, 2000. "Trade Effects of Minimum Quality Standards with and without Deterred Entry," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 15, pages 314-344.
  11. Bagwell, Kyle & Staiger, Robert W., 1994. "The sensitivity of strategic and corrective R&D policy in oligopolistic industries," Journal of International Economics, Elsevier, vol. 36(1-2), pages 133-150, February.
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  15. Mario Pezzino, 2010. "Minimum Quality Standards with More Than Two Firms Under Cournot Competition," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(3), pages 26-45, August.
  16. James A. Brander & Barbara J. Spencer, 1984. "Export Subsidies and International Market Share Rivalry," NBER Working Papers 1464, National Bureau of Economic Research, Inc.
  17. Sajal Lahiri & Yoshiyasu Ono, 1997. "Asymmetric oligopoly, international trade, and welfare: a synthesis," Journal of Economics, Springer, vol. 65(3), pages 291-310, October.
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  21. Naoto Jinji, 2003. "Strategic policy for product R&D with symmetric costs," Canadian Journal of Economics, Canadian Economics Association, vol. 36(4), pages 993-1006, November.
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  23. Hallak, Juan Carlos, 2006. "Product quality and the direction of trade," Journal of International Economics, Elsevier, vol. 68(1), pages 238-265, January.
  24. Miyagiwa, Kaz & Ohno, Yuka, 1997. "Strategic R&D policy and appropriability," Journal of International Economics, Elsevier, vol. 42(1-2), pages 125-148, February.
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