Multi‐Market Competition,R&D,and Welfare in Oligopoly |
| |
| Authors: | Akio Kawasaki Ming Hsin Lin Noriaki Matsushima |
| |
| Institution: | 1. Faculty of Education, Kagoshima University, 1-20-6 Korimoto, Kagoshima 890-0065, Japan;2. Faculty of Economics, Osaka University of Economics, 2-2-8 Osumi, Higashiyodogawa, Osaka 533-8533, Japan;3. Institute of Social and Economic Research, Osaka University, 6-1 Mihogaoka, Ibaraki, Osaka 567-0047, Japan |
| |
| Abstract: | 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. |
| |
| Keywords: | L13 O32 L11 |
|
|
