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Complementaries and commitment in a Cournot setting

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  • Manel Antelo

    (Universidade de Santiago de Compostela)

Abstract

When oligopolistic firms compete by investing simultaneously in cost-reducing R&D and in demand-creating advertising expenditures, their strategic commitment in such assets may differ qualitatively from the behavior pursued when only one of them is used. In particular, if R&D (and advertising) investment is decided on and made public before selecting the output, then cases of undercommitment in cost reduction can arise despite the non-existence of technological spillovers; and others in which there is no room for a differentiated strategic use of R\&D. Furthermore, when advertising is included among the investment variables of firms, their R&D expenses may equal or even exceed the socially optimal level.

Suggested Citation

  • Manel Antelo, 2002. "Complementaries and commitment in a Cournot setting," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 17(1), pages 3-36.
    • Handle: RePEc:emx:esteco:v:17:y:2002:i:1:p:3-36
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    File URL: https://estudioseconomicos.colmex.mx/index.php/economicos/article/view/201/203
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    References listed on IDEAS

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