We show the effects of entry of a new firm on the profits and welfare when the firms share the same initial cost of production but differ in terms of the costs of undertaking R&D. Considering a Cournot oligopoly model with innovation and linear demand and production costs, we show that entry reduces the profits of the incumbent firms and it can be welfare reducing.
It has been argued that a monopolist input supplier may find it profitable to create an outside source for its input if it reduces product price and attracts buyers ( , pp. 673-694). We consider a monopolist input supplier's incentive for outsourcing and R&D. We show that even if outsourcing can attract new buyers, it is not beneficial to the input supplier if either the existing final goods market is not very concentrated or cost reduction through R&D is sufficiently large. We further show that while R&D may be preferable to the input supplier, outsourcing may be socially desirable, and thus may create a conflict of interest between the input supplier and the society for R&D and outsourcing. Copyright � 2007 The Authors; Journal compilation � 2007 Blackwell Publishing Ltd and The University of Manchester.
Cooperative R&D, Failure in patent applications, Non-cooperative R&D, L10, L13, O32, D23,
COVID-19 was first reported in December 2019 in Wuhan, China; however, it took international health experts another six months to establish the airborne nature of transmission of the disease. The transmission of the infection through aerosolized virus particles opens a new frontier in global pandemic control initiatives. It necessitates the need for appropriate economic policies to end the COVID-19 recession in most parts of the world. Mass vaccination and herd immunity are potent tools in combatting the challenge of COVID-19. Global vaccination against the disease is also gaining momentum. However, new variants and infection surges threaten to undermine critical gains. Furthermore, complete vaccination of the world population may be many years away. Therefore, it is essential to design public policies and business strategies in a world of great uncertainty. Understanding the airborne transmission of coronavirus will help business leaders craft meaningful operational procedures to protect their stakeholders and minimize costly business disruptions. It will also help the policymakers to avoid economically costly lockdowns. International success in indoor air purification, outdoor air pollution mitigation, widespread adoption of hand hygiene, and universal mask usage can significantly help pandemic control and increase the efficacy of various pandemic control measures. Controlling the pandemic may help countries in opening their economies and kickstarting global travel in the post-COVID-19 world. Such actions may also help in lessening the global burden of many other respiratory diseases. They may, in turn, save countless lives while dramatically reducing premature deaths. Such health gains may be conducive towards boosting GDP, decreasing healthcare costs, increasing productivity, and improving health equities. Controlling the COVID-19 pandemic remains the prime directive of all global public policy measures. Investments in aerosolized virus particle transmission mitigation offer a unique opportunity to achieve health improvement goals whose positive impacts may remain potent for generations to come.
We consider the effects of product and process patents on profits and welfare. In a duopoly model, we show that if the cost of imitation is not very large, prisoner's dilemma occurs under process patent, thus creating lower profit of each firm under process patent than under product patent. Welfare is higher under process (product) patent for very small (not very small) cost of imitation. Although the possibility of cross-licensing never makes lower welfare under process patent for all costs of imitation, welfare is never lower under product patent under infinitely repeated game.Cross-licensing, Prisoner's dilemma, Process patent, Product patent, Repeated game, Welfare,
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