Process R&;D and Product Line Deletion by a Multiproduct Monopolist |
| |
Authors: | Ping Lin |
| |
Institution: | (1) Department of Economics, Lingnan University, Tuen Mun, Hong Kong |
| |
Abstract: | Relative to single-product firms, a multiproduct monopolist can internalize the negative externalities of its R&D investments
(the ``cannibalization effect') in two ways: (1) To lower R&D investment for each product; and (2) To delete some of its
product lines so as to enlarge the market size for the remaining lines. It is shown that line deletion is profitable if products
are close substitutes. If products are not close substitutes, the multiproduct monopolist keeps all product lines and invests
less in cost-reducing R&D than single-product firms engaging in Cournot competition with product differentiation. However,
it invests more in R&D than single-product firms if there are significant economies of scope in R&D, or if the oligopolistic
firms can cooperate in their R&D decisions.
|
| |
Keywords: | cost-reducing R& D cannibalization effect multiproduct firms scope economies in R& D |
本文献已被 SpringerLink 等数据库收录! |
|