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Product differentiation, research and development and IPR enforcement

Nabin, Munirul, Visser, Robin and Sgro, Pasquale 2017, Product differentiation, research and development and IPR enforcement, International review of economics and finance, In Press, pp. 1-19.

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Title Product differentiation, research and development and IPR enforcement
Author(s) Nabin, Munirul
Visser, Robin
Sgro, Pasquale
Journal name International review of economics and finance
Season In Press
Start page 1
End page 19
Total pages 19
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2017
ISSN 1059-0560
Keyword(s) Product Quality
Hotelling Price Competition
MNE and IPR Enforcement
Summary This paper uses a spatial Hotelling price competition model with quadratic transportation costs to analyse the nature of firm’s competition with respect to level of product differentiation (i.e. product design) and process R&D in the presence of strong and weak intellectual property rights (IPR) enforcement. We consider two possible cases: (i) a foreign firm becomes an exporting firm or (ii) a foreign firm becomes a Multinational Enterprise (MNE). We find that, in both cases the optimum level of product differentiation is negatively related to Process R&D. We also allow the local firm to imitate MNE’s product differentiation level as well as its Process R&D; and we find that, under spatial Hotelling price competition, the local firm has no incentive to imitate the MNE’s product design, i.e. the level of product differentiation of the MNE, at Nash Equilibrium. Compared to the behaviour of a social planner, the MNE provides more differentiated goods than a social planner and when the local firm does not do undertake any R&D activities but can imitate the Process R&D of the MNE, a social planer has no incentive to enforce strong IPR at the optimum level.
Language eng
Field of Research 140104 Microeconomic Theory
140209 Industry Economics and Industrial Organisation
1402 Applied Economics
1502 Banking, Finance And Investment
Socio Economic Objective 970114 Expanding Knowledge in Economics
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2017, Elsevier
Persistent URL http://hdl.handle.net/10536/DRO/DU:30090822

Document type: Journal Article
Collection: Department of Economics
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