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

Mukherjee, Arijit; Ray, Achintya

Authors

Achintya Ray



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.

Journal Article Type Article
Publication Date 2014-06
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
APA6 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
DOI https://doi.org/10.1111/manc.12015
Publisher URL https://onlinelibrary.wiley.com/doi/full/10.1111/manc.12015
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