We revisit Maxwell's (1998) analysis to show that MQS regulation has no effects on the high-quality firm's incentive to adopt a more efficient technology in a vertically differentiated duopoly with full market coverage and convex costs of quality improvements which are independent of the scale...

We examine a vertically differentiated duopoly where firms invest in process and product innovation and then compete in prices under full market coverage. We show that (i) process and product innovation are complements (substitutes) for the low-quality (high-quality) firm; (ii) the firm which is...

In an extended version of d'Aspremont and Jacquemin's (1988) R&D competition model we find a region where the game is a prisoner's dilemma: firms still invest in R&D but they would obtain a higher profit by not investing at all. In a repeated version of the game, we prove that firms implicitly...

The relationship amongst state-redundancy and time consistency of differential games is investigated. A class of state-redundant games is detected, where the state dynamics and the payoff functions of all players are additively separable w.r.t. control variables. We prove that, in this class of...

We analyse the problem of the choice of the market variable in a model where firms activate R&D investments for process innovation. We establish that (i) firms always choose the Cournot behaviour; and (ii) there exists a set of the relevant parameters where a benevolent social planner prefers...

We analyse R&D activity in transport and communication technology (TCRD), in a Cournot duopoly. Transport and communication costs are of the iceberg type, i.e., using up some portion of the product along its path to the final buyer. Firms invest in TCRD to increase the net amount of the product...

In this paper we propose a simple, intuitive approach to asset valuation in terms of marginal contributions to the characteristics (moments) of the market portfolio. Considering only the first two moments, mean and variance, the valuation equation is shown to correspond to Sharpe's CAPM. A...

We investigate a dynamic Cournot duopoly with intraindustry trade, where firms invest in R&D to reduce the level of iceberg transportation costs. We adopt both open-loop and closed-loop equilibrium concepts, showing that a unique (saddle point) steady state exists in both cases. In the open-loop...

We investigate the issue of strategic substitutability/complementarity in differential games. We prove that instantaneous best replies exist if Hamiltonian functions are multiplicative in the control variables. Otherwise, if the Hamiltonians are addively separable w.r.t. controls, a dominant...

We investigate the timing of adoption of product and process innovation by using a differential game in which firms may invest in both activities. We consider horizontal product innovation that reduces product substitutability, and process innovation that reduces marginal cost. First, we...