سیاست بهینه تحقیق و توسعه و انتخاب کیفیت درون زا

In a quality-differentiated duopoly where (i) quality is endogenously chosen before production, (ii) fixed costs are increasing and convex in quality, and (iii) variable production costs are insubstantial, an R&D subsidy for the firm producing a high-quality product improves social welfare, irrespective of whether the ensuing product–market competition is Bertrand or Cournot, while an R&D subsidy for the firm producing a low-quality product improves social welfare only if Bertrand, and not if Cournot.

In high-technology industries, such as automobiles, computers, consumer electronics, and others, the firms engage in Research and Development (R&D, hereafter) activities to develop new products and improve product qualities, i.e. product R&D. Since oligopolistic competition prevails in such industries, the firms invest strategically in product R&D. In that case, socially optimal product qualities are not necessarily chosen by an individual firm. But there are many cases where governments have used various policy measures to affect R&D activities. In particular, R&D subsidies and government-sponsored research projects have been popular in Japan and European countries.

In this paper, based on the model of a quality-differentiated duopoly with endogenous quality choice, we have discussed the implications of subsidy/tax policies targeted at R&D investments to improve product qualities in the cases of Bertrand and Cournot duopoly. We have shown that the effects of R&D subsidies on qualities and quantities demanded depend on the firm’s strategic relationship in the quality decision. Moreover, we have presented the R&D policies to maximize (i) net total consumer surplus, (ii) net producer surplus, i.e., aggregate profit, and (iii) social surplus. (i) Regardless of the mode of competition, the R&D policy to maximize net consumer surplus is to subsidize the two firms, if the government’s burden of the subsidies is sufficiently small. (ii) Under Bertrand competition, the R&D policy to maximize net producer surplus is to subsidize the higher quality firm and tax the lower quality firm. On the other hand, under Cournot competition, R&D taxation upon the two firms increases net producer surplus.