Strategic R&D policy under vertically differentiated oligopoly |
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Authors: | Jee-Hyeong Park |
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Institution: | Department of Economics, Wayne State University |
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Abstract: | In this paper strategic R&D policy is analysed, where a high-tech firm and a low-tech firm compete in a third country with vertically differentiated ( high-quality and low-quality ) products. If the product market is under price competition, the high-tech (low-tech) firm's government has an incentive to tax (subsidize) its domestic firm's product R&D activities. If the product market is under quantity competition, the results are opposite: an R&D subsidy (tax) incentive for the high-tech (low-tech) firm's government; and the high-tech firm's government always gains in the R&D policy game, in contrast to the standard prisoner's dilemma result of the R&D policy literature. JEL Classification: F13 |
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