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| Author: | Ishira, J. Matsumura, T. Matsushima, N. |
| Title: | Market competition, R&D and firm profits in asymmetric oligopoly |
| Journal: | Journal of Industrial Economics
2011 : SEP, VOL 59:3, p.484-505 |
| Index terms: | oligopoly incentives investments competition profit R&D models |
| Language: | eng |
| Abstract: | We research a Cournot model with strategic R&D investments, which has efficient low-cost firms competing against less efficient high-cost firms. We find that an increased number of high-cost firms can boost R&D by the low-cost firms, while it always reduces high-cost firms' R&D. Moreover, this impact can be strong enough to compensate for the loss arising from more intense market competition: the profits of the low-cost firms may indeed increase with the number of high-cost firms. An implication of this result is far-reaching, as it encourages low-cost firms to help, rather than harm, high-cost competitors. We relate this deduction to a practice known as open knowledge disclosure, especially Ford's strategy of disclosing its know-how publicly and broadly at the early 20th century. |
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