Optimal Product R&D Policies with Endogenous Quality Choices and Unilateral Spillover

Yumiko Taba*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    7 Citations (Scopus)


    This study derives non-cooperative and cooperative optimal product research and development (R&D) policies of a country with a high-quality firm and a country with a low-quality firm in the presence of technology spillover under Cournot and Bertrand competitions in an international duopoly. When the respective governments determine their R&D policies non-cooperatively, optimal policies for both countries involve an R&D tax (subsidy) if spillover is large (small). When the governments choose their R&D policies cooperatively, a tax is always optimal for the country with low-quality firm and a subsidy (tax) is optimal for the country with high-quality firm if spillover is large (small). In addition, we show that the non-cooperative optimal product R&D Policy is tax for a wider range of spillover effects under Cournot competition, compared to the case of Bertrand competition.

    Original languageEnglish
    Pages (from-to)365-391
    Number of pages27
    JournalB.E. Journal of Economic Analysis and Policy
    Issue number1
    Publication statusPublished - 2016 Jan 1


    • endogenous quality choices
    • product R&D policy
    • technology spillover

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance (miscellaneous)
    • Economics and Econometrics


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