publication . External research report . Research . 2009

A Small Firm Leads to Curious Outcomes : Social Surplus, Consumer Surplus

Matsumura, Toshihiro; Matsushima, Noriaki;
English
  • Published: 01 Jun 2009 Journal: Institute of Social and Economic Research Discussion Papers, volume 742
  • Publisher: The Institute of Social and Economic Research, Osaka University
Abstract
This paper investigates an asymmetric duopoly model with a Hotelling line. We find that helping a small (minor) firm can reduce both social and consumer surplus. This makes a sharp contrast to existing works showing that helping minor firms can reduce social surplus but always improves consumer surplus. We also investigate R&D competition. We find that a minor firm may engage in R&D more intensively than a major firm in spite of economies of scale in R&D activities.
Subjects
free text keywords: L13, O32, R32, product selection, minor firm, R&D, ISER discussion paper, ddc:330
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Research . 2009
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External research report . 2009
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