Multi-Market Competition, R&D, and Welfare in Oligopoly

• Autores: Akio Kawasaki, Ming Hsin Lin, Noriaki Matsushima
• Localización: Southern Economic Journal, ISSN 0038-4038, ISSN-e 2325-8012, Vol. 80, Nº. 3, 2014, págs. 803-815
• Idioma: inglés
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• Resumen

  • We investigate a multi-market Cournot model with strategic process research and development (R&D) investments wherein a multi-market firm meets new competitors that enter one of the markets. We show that entry can enhance the total R&D expenditures of the multi-market firm. 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 entry can appear. Our results imply that diversification of their products can be a useful strategy for firms.