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Temporary and permanent technology lock-ins in the quality-differentiated Bertrand competition

Bondarev, Anton and Krysiak, Frank C.. (2017) Temporary and permanent technology lock-ins in the quality-differentiated Bertrand competition. WWZ Working Papers, 2017 (09).

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Official URL: https://edoc.unibas.ch/61308/

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Abstract

We consider a setting where strategic behavior of r&d firms can lead to different types of a technology lock-in, permanent or temporary, in an eventually inferior technology. The simple setting with one incumbent and one potential entrant may lead to a wide variety of possible strategic regimes. We study conditions on relative market strength of the incumbent and the entrant which lead to different strategic actions and demonstrate, that such a strategic behavior is not always socially suboptimal, since it may lead to faster development of the existing technology due to persistent threat of the potential entrant. We further elaborate on the selection of support tools which may induce the development of new technology in the second-best world and establish criteria for these tools to be social welfare improving ones.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Umweltökonomie (Krysiak)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Bondarev, Anton A. and Krysiak, Frank Christian
Item Type:Working Paper
Publisher:WWZ, University of Basel
Number of Pages:41
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2017/09
Last Modified:07 Mar 2018 12:55
Deposited On:07 Mar 2018 12:55

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