Product and Process R&D under Asymmetric Demands

• DOI: 10.1628/jite-2018-0015
• Publication Date: 2018-08-28T01:05:26Z
• Authors: Yi-Jie Wang; Kung-Cheng Andy Wang; Wen-Jung Liang; Bo-Yi Lee

We develop a two-market model with asymmetric demands to examine the optimal product and process R+amp;D under Bertrand and Cournot competition. We show that when the big market is sufficiently large and the cost parameter of product R+amp;D is small or when the market is symmetric and the marginal disutility rate is high, the Cournot aggregate product R+amp;D is greater than that under Bertrand competition. Next, when the big market is not sufficiently large and the cost parameter of product R+amp;D is small, the Bertrand aggregate process R+amp;D is greater than that under Cournot competition if the marginal disutility rate is low.