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- Title
Symmetric Cournot oligopoly and economic welfare: a synthesis.
- Authors
Okuno-Fujiwara, Masahiro; Suzumura, Kotaro
- Abstract
Recently, Mankiw-Whinston (1986) and Suzumura-Kiyono (1987) have shown that socially excessive firm entry occurs in unregulated oligopoly. This paper extends this "excess entry" results by looking into strategic aspects of cost-reducing R&D investment that creates incentives towards socially excessive investments. In the first stage, firms decide whether or not to enter the market. In the second stage, firms make a commitment to cost-reducing R&D investment. In the third stage, firms compete in output quantities. It is shown that the excess entry holds even in the presence of strategic commitments.
- Subjects
OLIGOPOLIES; DEMAND function; IMPERFECT competition; MARKET entry; MARKETING strategy; BUSINESS planning; INVESTMENTS
- Publication
Economic Theory, 1993, Vol 3, Issue 1, p43
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/BF01213691