We consider a dynamic 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, as concerns the effect of the number of firms upon the optimal degree of product differentiation. We also compare the private optima with the social optimum, and derive implications concerning the social desirability of different decision rules.

Private and Social Incentives Towards Investment in Product Differentiation / CELLINI R.; LAMBERTINI L.. - In: INTERNATIONAL GAME THEORY REVIEW. - ISSN 0219-1989. - STAMPA. - 6:(2004), pp. 493-508. [10.1142/S0219198904000320]

Private and Social Incentives Towards Investment in Product Differentiation

CELLINI, ROBERTO;LAMBERTINI, LUCA
2004

Abstract

We consider a dynamic 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, as concerns the effect of the number of firms upon the optimal degree of product differentiation. We also compare the private optima with the social optimum, and derive implications concerning the social desirability of different decision rules.
2004
Private and Social Incentives Towards Investment in Product Differentiation / CELLINI R.; LAMBERTINI L.. - In: INTERNATIONAL GAME THEORY REVIEW. - ISSN 0219-1989. - STAMPA. - 6:(2004), pp. 493-508. [10.1142/S0219198904000320]
CELLINI R.; LAMBERTINI L.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/1704
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