Dynamic analysis of discontinuous best response with innovation.

Fabio Tramontana, Fabio Giovanni Lamantia, Fabio Lamantia, Mario Pezzino

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review

1 Citazioni (Scopus)

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.
Lingua originaleEnglish
pagine (da-a)120-133
Numero di pagine14
RivistaJOURNAL OF ECONOMIC DYNAMICS & CONTROL
Volume91
DOI
Stato di pubblicazionePubblicato - 2018

Keywords

  • Discontinuous best response functions
  • Global analysis
  • Learning
  • Oligopolistic competition
  • Process innovation

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