Entry, profit and welfare under asymmetric R&D costs: entry, profit and welfare

Mukherjee, Arijit; Ray, Achintya

Abstract

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.

Citation

Mukherjee, A., & Ray, A. (2014). Entry, profit and welfare under asymmetric R&D costs: entry, profit and welfare. Manchester School, 82(3), 284-295. doi:10.1111/manc.12015

• Journal Article Type: Article
• Acceptance Date: Mar 22, 2013
• Online Publication Date: Aug 27, 2013
• Publication Date: 2014-06
• Deposit Date: Dec 10, 2018
• Journal: The Manchester School
• Print ISSN: 1463-6786
• Electronic ISSN: 1467-9957
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 82
• Issue: 3
• Pages: 284-295
• DOI: https://doi.org/10.1111/manc.12015
• Public URL: https://nottingham-repository.worktribe.com/output/1394596
• Publisher URL: https://onlinelibrary.wiley.com/doi/full/10.1111/manc.12015