Lambertini, Luca ; Cellini, Roberto
(2002)
Private and Social Incentives Towards Investment in Product Differentiation.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 18.
DOI 10.6092/unibo/amsacta/4867.
In: Quaderni - Working Paper DSE
(431).
ISSN 2282-6483.
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Abstract
We consider a nynamic oligopoly where firms invest to increase product differentiation and an externality effect operates in the R&D activity. We compare the steady state solutions under alternative decision rules, namely, the open-loop and the closed-loop Nash equilibrium. Significant differences emerge, concerning the effect of the number of firms upon the optimal degree o product differentiation. We also compare the privat optima with the social optimum, and derive implications concerning the social diserability of different decision rules.
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