Abstract
Starting from the static analysis in Eckert et al. (2017), we study a Cournot duopoly where firms can decide to incur fixed costs in activities that improve their competitiveness (i.e. product development or process innovation). Innovation costs generate discontinuities in the firms quantity best response functions and, in turn, a variety of equilibrium configurations, including multiple equilibria. We provide a dynamic global analysis of the equilibria and show the way in which firms’ initial expectations regarding the rivals level of output are crucial in defining the configuration of the long run equilibrium.
| Original language | English |
|---|---|
| Pages (from-to) | 120-133 |
| Number of pages | 14 |
| Journal | Journal of Economic Dynamics and Control |
| Volume | 91 |
| Issue number | 91 |
| DOIs | |
| Publication status | Published - 2018 |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 9 Industry, Innovation, and Infrastructure
All Science Journal Classification (ASJC) codes
- Economics and Econometrics
- Control and Optimization
- Applied Mathematics
Keywords
- Discontinuous best response functions
- Global analysis
- Learning
- Oligopolistic competition
- Process innovation
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