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COMPETITION, INNOVATION AND WELFARE *
Author(s) -
MUKHERJEE ARIJIT
Publication year - 2011
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2010.02184.x
Subject(s) - cournot competition , bertrand paradox (economics) , economics , bertrand competition , competition (biology) , social welfare , welfare , product market , microeconomics , product (mathematics) , product differentiation , production (economics) , oligopoly , market economy , incentive , ecology , geometry , mathematics , political science , law , biology
In an economy with drastic innovation, we analyze the effects of product market competition on social welfare. Considering Cournot and Bertrand competition as different types of product market competition, we show that Cournot competition may generate higher social welfare depending on the difference between the pre‐ and post‐innovation costs of production and the magnitude of R&D productivities. In our analysis, R&D investments are higher under Bertrand (Cournot) competition if R&D productivities are sufficiently low (high).