Document Type

Article

Publication Date

2019

Abstract

We consider a setting where firms in the first stage invest in cost-reducing R&D. In the market stage, one firm sets a quantity, and another sets a price. We prove that the quantity-setting firm invests more in R&D, has a lower price, and produces higher quantity than the price-setting firm. We also consider welfare implications.

Comments

© 2019 Elsevier B.V. Original published version available at https://doi.org/10.1016/j.econlet.2019.108549

Publication Title

Economics Letters

DOI

10.1016/j.econlet.2019.108549

Included in

Finance Commons

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