Quality-Price Competition and Product R&D Investment Policies in Developing and Developed Countries

This study establishes a third‐country trade model where firms from developing and developed countries invest into product R&D under their governments' subsidisation policies to analyse firms' quality–price choices and governments' optimal product R&D investment policies. We s...

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Bibliographic Details
Published in:The Economic record 2014-06, Vol.90 (289), p.197-206
Main Author: Ishii, Yasunori
Format: Article
Language:English
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Summary:This study establishes a third‐country trade model where firms from developing and developed countries invest into product R&D under their governments' subsidisation policies to analyse firms' quality–price choices and governments' optimal product R&D investment policies. We show that a rise in the developing (developed) country's product R&D subsidy makes firms' quality–price competition more (less) intense and that the governments' optimal product R&D policies, depending on the features of their quality and demand functions, can both be subsidies even under Bertrand price competition, contrary to the findings of previous studies.
ISSN:0013-0249
1475-4932
DOI:10.1111/1475-4932.12076