Acceso usuarios
Tsuyoshi Toshimitsu
In a quality-differentiated duopoly where (i) quality is endogenously chosen before production, (ii) fixed costs are increasing and convex in quality, and (iii) variable production costs are insubstantial, an R&D subsidy for the firm producing a high-quality product improves social welfare, irrespective of whether the ensuing product–market competition is Bertrand or Cournot, while an R&D subsidy for the firm producing a low-quality product improves social welfare only if Bertrand, and not if Cournot.
