Lambertini, Luca ; Mantovani, Andrea
(2000)
Price vs Quantity in a Duopoly with Technological Spillovers: A Welfare Re-Appraisal.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 17.
DOI 10.6092/unibo/amsacta/4920.
In: Quaderni - Working Paper DSE
(389).
ISSN 2282-6483.
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Abstract
We analyse the problem of the choice of the market variable in a model where firms activate R&D investments for process innovation. We establish that (i) firms always choose the Cournot behaviour; and (ii) there exists a set of the relevant parameters where a benevolent social planner prefers quantity setting to price setting. This happens when the marginal cost of R&D activities is relatively low while technological externalities are relatively high. In this situation, the conflict between social and private preferences over the type of market behaviour disappears.
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