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S tackelberg Competition, Innovation and Social Efficiency of Entry
Author(s) -
Chao Angela C.,
Lee Jenyao,
Wang Leonard F.S.
Publication year - 2017
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/manc.12130
Subject(s) - spillover effect , competition (biology) , economics , homogeneous , ex ante , returns to scale , microeconomics , economies of scale , barriers to entry , industrial organization , market structure , production (economics) , macroeconomics , ecology , physics , biology , thermodynamics
In literature, the common wisdom is that entry in an industry with homogeneous products may be socially insufficient instead of excessive in the absence of scale economies. In this paper, we formally introduce endogenous research and development ( R & D ) and cost asymmetry into both C ournot and S tackelberg competition, and show that entry is socially insufficient in the presence of ex ante asymmetric costs coupled with the spillover effect of R & D .