International Cournot Duopoly and R&D Subsidies under Demand Uncertainty

Yasunori Ishii

    Research output: Contribution to journalArticle

    4 Citations (Scopus)

    Abstract

    Establishing a third-market model of international Cournot duopoly where home and foreign firms choose optimal R&D levels under demand uncertainty, this paper re-examines results on R&D subsidies proposed by Spencer and Brander [Review of Economic Studies 50 (1983): 707-722]. It is assumed that R&D subsidies consist of fixed and variable parts, demand uncertainty is of the additive type, and firms are risk averse. It is shown that signs of the effects of a change in a home fixed R&D subsidy are definitely determined, but those of a change in a home variable R&D subsidy are ambiguous, and, as a result, signs of optimal home R&D subsidies are also ambiguous even if the foreign R&D reaction curve is downward-sloping.

    Original languageEnglish
    Pages (from-to)203-222
    Number of pages20
    JournalJournal of Economics/ Zeitschrift fur Nationalokonomie
    Volume72
    Issue number2
    Publication statusPublished - 2000

    Keywords

    • Demand uncertainty
    • Fixed and variable R&D subsidies
    • Risk-averse cournot duopoly

    ASJC Scopus subject areas

    • Business, Management and Accounting(all)
    • Economics and Econometrics

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