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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Zulehner, Christine / Schirle, Tammy

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When Small Firms Fight Back Against Large Firms in R&D Activities

Toshihiro Matsumura1 / Noriaki Matsushima2

1University of Tokyo,

2Osaka University,

Citation Information: The B.E. Journal of Economic Analysis & Policy. Volume 10, Issue 1, ISSN (Online) 1935-1682, DOI: 10.2202/1935-1682.2597, September 2010

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This paper investigates an asymmetric duopoly model with R&D competition and product positioning. We find that an inefficient (small) firm may engage in R&D more intensively than an efficient (large) firm in spite of economies of scale in R&D activities. Contrary to the findings of previous studies, competition is more likely to have a positive effect on the investments of the small firm than on those of the large firm. We also find that improving the efficiency of the inefficient firm can reduce both social and consumer surplus.

Keywords: firm heterogeneity; R&D; economies of scale; product positioning

Citing Articles

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Toshihiro Matsumura and Noriaki Matsushima
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Hiroaki Ino and Toshihiro Matsumura
International Economic Review, 2012, Volume 53, Number 4, Page 1323
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Journal of Regional Science, 2012, Volume 52, Number 3, Page 420
Dominik Kress and Erwin Pesch
European Journal of Operational Research, 2012, Volume 217, Number 3, Page 483
Toshihiro Matsumura and Daisuke Shimizu
Bulletin of Economic Research, 2015, Volume 67, Number 1, Page 1
Arijit Mukherjee and Achintya Ray
The Manchester School, 2014, Volume 82, Number 3, Page 284

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