Product R&D Investment Policies in an International Duopoly |
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Authors: | Yumiko Taba Yasunori Ishii |
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Institution: | 1. Faculty of Education and Integrated Arts and Sciences, Waseda University, Shinjuku‐ku, Tokyo, Japan;2. Graduate School of Economics, Waseda University, Shinjuku‐ku, Tokyo, Japan |
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Abstract: | This study analyzes the optimal product R&D investment policies of a developed and a developing country in an international Cournot duopoly where firms from these two countries compete through endogenous quality–quantity decisions. We explore a new international trade model by using demand functions derived from utility functions. We find that the optimal product R&D investment policies for both countries are subsidies. This study counters a finding that used Hotelling‐type demand functions and it partially modifies another result that adopted the same demand functions but with an international Bertrand duopoly. |
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