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Entry, Profit and Welfare under Asymmetric R&D Costs

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  • Arijit Mukherjee
  • Achintya Ray

Abstract

type="main"> We show the effects of entry of a new firm on the profits and welfare when the firms share the same initial cost of production but differ in terms of the costs of undertaking R&D. Considering a Cournot oligopoly model with innovation and linear demand and production costs, we show that entry reduces the profits of the incumbent firms and it can be welfare reducing.

Suggested Citation

  • Arijit Mukherjee & Achintya Ray, 2014. "Entry, Profit and Welfare under Asymmetric R&D Costs," Manchester School, University of Manchester, vol. 82(3), pages 284-295, June.
    • Handle: RePEc:bla:manchs:v:82:y:2014:i:3:p:284-295
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    File URL: http://hdl.handle.net/10.1111/manc.12015
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    References listed on IDEAS

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    Cited by:

    1. Goerke, Laszlo, 2020. "A political economy perspective on horizontal FDI in a dynamic Cournot-oligopoly with endogenous entry," European Journal of Political Economy, Elsevier, vol. 63(C).
    2. Kabiraj, Tarun & Chattopadhyay, Srobonti, 2014. "Cooperative vs. non-cooperative R&D incentives under incomplete information," MPRA Paper 59259, University Library of Munich, Germany.
    3. Hattori, Keisuke & Yamada, Mai, 2020. "Welfare Implications of Sequential Entry with Heterogeneous Firms," MPRA Paper 103422, University Library of Munich, Germany.
    4. Yenipazarli, Arda, 2021. "Downstream entry revisited: Economic effects of entry in vertically-related markets," Omega, Elsevier, vol. 103(C).

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