Product R&D and International Trade under Bertrand Competition

다국어 초록 (Multilingual Abstract)

This study analyzes the equilibrium level of product differentiation, aggregate profit, and aggregate welfare from competition and two types of cooperation in product R&D investments in an international duopoly model under price competition. We show that the equilibrium level of product differentiation can be the highest in the harmonization of product R&D investment; the second highest in the asymmetry of product R&D investment; and the lowest in product R&D competition. We also show that aggregate profit and aggregate welfare under trade liberalization can be the highest in the harmonization of product R&D investment if the difference between the cost of product R&D is sufficiently small, while those under trade liberalization can be greatest in product R&D competition if the difference in cost is sufficiently large enough to reverse the sign.