Dynamic Hotelling Monopoly with Product Development

Lambertini, Luca (2001) Dynamic Hotelling Monopoly with Product Development. Bologna: Dipartimento di Scienze economiche DSE, p. 29. DOI 10.6092/unibo/amsacta/4902. In: Quaderni - Working Paper DSE (399). ISSN 2282-6483.
Full text available as:
[img]
Preview
Text(pdf)
License: Creative Commons Attribution Non-commercial

Download (230kB) | Preview

Abstract

I characterise R&D investment in product innovation of a profit-seeking monopolist versus that of a social planner in a spatial market, under either partial or full market coverage. Under partial coverage, the steady state product design is the outcome of the tradeoff between the incentive to locate as close as possible to the middle of the preference space, and the incentive to save upon R&D costs. The planner does not produce the variety preferred by the average consumer, in situations where the R&D investment is too costly. This result is reinforced under full market coverage, where the planner’s incentive to innovate is always weaker than the monopolist’s, and the planner produces the average (and median) consumer’s preferred variety if and only if the rental price of capital is nil.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Keywords
horizontal differentiation, R&D, steady state, saddle point
Subjects
ISSN
2282-6483
DOI
Deposit date
18 Mar 2016 10:13
Last modified
18 Mar 2016 10:13
URI

Other metadata

Downloads

Downloads

Staff only: View the document

^