Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86421
Authors: 
Hinloopen, Jeroen
Vandekerckhove, Jan
Year of Publication: 
2007
Series/Report no.: 
Tinbergen Institute Discussion Paper 07-097/1
Abstract: 
We consider the efficiency of Cournot and Bertrand equilibria in a duopoly with substitutable goods where firms invest in process R&D. Under Cournot competition firms always invest more in R&D than under Bertrand competition. More importantly, Cournot competition yields lower prices than Bertrand competition when the R&D production process is efficient, when spillovers are substantial, and when goods are not too differentiated. The range of cases for which total surplus under Cournot competition exceeds that under Bertrand competition is even larger as competition over quantities always yields the largest producers' surplus.
Subjects: 
Bertrand competition
Cournot competition
process R&D
efficiency
JEL: 
L13
Document Type: 
Working Paper

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