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Dynamic Spatial Monopoly with Product Development

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  • Luca Lambertini

Abstract

Abstract The optimal R&D investment in product innovation of a profit-seeking monopolist is characterized vs that of a social planner in a spatial market with transportation disutility, under full market coverage. It is shown that the planner's incentive to innovate is always weaker than the monopolist's, since the planner trades off the minimization of the social cost of transportation against the cost of R&D.

Suggested Citation

  • Luca Lambertini, 2007. "Dynamic Spatial Monopoly with Product Development," Spatial Economic Analysis, Taylor & Francis Journals, vol. 2(2), pages 157-166.
    • Handle: RePEc:taf:specan:v:2:y:2007:i:2:p:157-166
    DOI: 10.1080/17421770701345459
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    References listed on IDEAS

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    1. Lambertini, Luca, 1997. "Unicity of the equilibrium in the unconstrained Hotelling model," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 785-798, November.
    2. Lambertini, Luca, 2002. "Equilibrium locations in a spatial model with sequential entry in real time," Regional Science and Urban Economics, Elsevier, vol. 32(1), pages 47-58, January.
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    9. Harter, John F R, 1993. "Differentiated Products with R&D," Journal of Industrial Economics, Wiley Blackwell, vol. 41(1), pages 19-28, March.
    10. Lambertini, Luca, 2005. "Advertising in a dynamic spatial monopoly," European Journal of Operational Research, Elsevier, vol. 166(2), pages 547-556, October.
    11. M. L. Vidale & H. B. Wolfe, 1957. "An Operations-Research Study of Sales Response to Advertising," Operations Research, INFORMS, vol. 5(3), pages 370-381, June.
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    Cited by:

    1. B. Fingleton & S. Brakman & P. Cheshire & H. Garretsen & D. Igliori & J. Le Gallo & P. McCann & J. McCombie & V. Monastiriotis & M. Roberts, 2007. "Editorial," Spatial Economic Analysis, Taylor & Francis Journals, vol. 2(2), pages 111-115.

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    More about this item

    Keywords

    Location; innovation; monopoly; L12; O31;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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