A small firm leads to curious outcomes: Social surplus, consumer surplus, and R&D activities

This paper investigates an asymmetric duopoly model with a Hotelling line. We find that helping a small (minor) firm can reduce both social and consumer surplus. This makes a sharp contrast to existing works showing that helping minor firms can reduce social surplus but always improves consumer surplus. We also investigate R&D competition. We find that a minor firm may engage in R&D more intensively than a major firm in spite of economies of scale in R&D activities.

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Year of publication:	2009-06
Authors:	Matsumura, Toshihiro ; Matsushima, Noriaki
Institutions:	Institute of Social and Economic Research (ISER), Osaka University

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Series:	ISER Discussion Paper.
Type of publication:	Book / Working Paper
Language:	English
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10004979935