TY - JOUR
T1 - International Cournot Duopoly and R&D Subsidies under Demand Uncertainty
AU - Ishii, Yasunori
PY - 2000
Y1 - 2000
N2 - 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.
AB - 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.
KW - Demand uncertainty
KW - Fixed and variable R&D subsidies
KW - Risk-averse cournot duopoly
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M3 - Article
AN - SCOPUS:0347998295
VL - 72
SP - 203
EP - 222
JO - Journal of Economics/ Zeitschrift fur Nationalokonomie
JF - Journal of Economics/ Zeitschrift fur Nationalokonomie
SN - 0931-8658
IS - 2
ER -