Premium
Quality–Price Competition and Product R&D Investment Policies in Developing and Developed Countries
Author(s) -
Ishii Yasunori
Publication year - 2014
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/1475-4932.12076
Subject(s) - subsidy , competition (biology) , product (mathematics) , developing country , investment (military) , economics , quality (philosophy) , bertrand competition , international economics , microeconomics , industrial organization , business , market economy , cournot competition , oligopoly , economic growth , epistemology , politics , political science , law , biology , ecology , philosophy , geometry , mathematics
This study establishes a third‐country trade model where firms from developing and developed countries invest into product R&D under their governments' subsidisation policies to analyse firms' quality–price choices and governments' optimal product R&D investment policies. We show that a rise in the developing (developed) country's product R&D subsidy makes firms' quality–price competition more (less) intense and that the governments' optimal product R&D policies, depending on the features of their quality and demand functions, can both be subsidies even under Bertrand price competition, contrary to the findings of previous studies.