Endogenous choice of capacity and product innovation in a differential duopoly

Lambertini, Luca ; Rossini, Giampaolo (1998) Endogenous choice of capacity and product innovation in a differential duopoly. Bologna: Dipartimento di Scienze economiche DSE, p. 19. DOI 10.6092/unibo/amsacta/4988. In: Quaderni - Working Paper DSE (320). ISSN 2282-6483.
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Abstract

We model a symmetric duopoly where firms choose whether to be quantity setters or price setters by deciding the optimal capacity; undertake R&D activity to determine the degree of differentiation; and finally compete in the market. Two games are proposed, where investment decisions follow different sequences. We assess price and quantity decisions, finding a set of equilibria where the choice of the market variable is affected by both technological commitments. As a result, the acquired wisdom that quantity setting is a dominant strategy for firms, while price setting is a dominant strategy from a social standpoint, may not be confirmed.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Rossini, Giampaolo
Keywords
R&D, product innovation, capacity
Subjects
ISSN
2282-6483
DOI
Deposit date
05 Apr 2016 09:14
Last modified
05 Apr 2016 09:14
URI

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