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Investment in transport and communication technology in a cournot duopoly with trade

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  • L. Lambertini
  • G. Rossini

Abstract

We investigate the role of R&D investment in transport and communication (TCRD) in a Cournot duopoly with trade. Our analysis suggests that firms may invest in TCRD at reasonable levels of efficiency of TCRD even when they do not maximize their aggregate payoffs, i.e., when the game is a prisoner`s dilemma. As we consider countries of different size, it appears that for low levels of efficiency of TCRD only small countries invest. Welfare effects suggest that investing in TCRD is superior for the country that understands it. The terns of trade improve as the foreign market gets larger and, in some cases, if the foreign firms invest in TCRD.

Suggested Citation

  • L. Lambertini & G. Rossini, 2001. "Investment in transport and communication technology in a cournot duopoly with trade," Working Papers 407, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:407
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    1. Colombo, Luca & Lambertini, Luca & Mantovani, Andrea, 2009. "Endogenous transportation technology in a Cournot differential game with intraindustry trade," Japan and the World Economy, Elsevier, vol. 21(2), pages 133-139, March.
    2. G. Rossini & L. Vici, 2007. "Vertical integration, disintegration and ability to export," Working Papers 592, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Felbermayr, Gabriel J. & Tarasov, Alexander, 2022. "Trade and the spatial distribution of transport infrastructure," Journal of Urban Economics, Elsevier, vol. 130(C).
    4. R. Antonietti & D. Antonioli, 2007. "Production offshoring and the skill composition of Italian manufacturing firms A quasi-experimental analysis," Working Papers 593, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Bacchiega, Emanuele & Randon, Emanuela & Zirulia, Lorenzo, 2012. "Strategic accessibility competition," Research in Economics, Elsevier, vol. 66(2), pages 195-212.
    6. L. Colombo & L. Lambertini & A. Mantovani, 2003. "A Differential Game with Investment in Transport and Communication R&D," Working Papers 466, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Gianpaolo Rossini & Paolo Zanghieri, 2008. "What Drives Price Differentials of Consumables in Europe? Size? Affluence? Or Both?," Open Economies Review, Springer, vol. 19(1), pages 121-134, February.

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