Helping Minor Firms Reduces Welfare

Lahiri, Sajal; Ono, Yoshiyasu

doi:10.2307/2233727

Cited by 237 publications

(225 citation statements)

References 6 publications

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“…This possibility arises if a very ine¢ cient …rm obtains a technology transfer that reduces its cost only slightly; then its resulting increase in production will displace the production of more e¢ cient …rms, thereby reducing social welfare. This result has already been observed by Lahiri and Ono (1988). The question, then, is whether this implies that jointly pro…table licensing can reduce welfare, contrary to previous results.…”

Section: Welfare E¤ectscontrasting

confidence: 57%

“…Turning to the welfare e¤ects of a technology transfer, it is known that making an ine¢ cient …rm slightly more e¢ cient can actually reduce welfare (Lahiri and Ono 1988). This implies that, as a corollary of Theorem 1, a jointly pro…table transfer can reduce social welfare if there are more than two …rms and if both the licensor and licensee are su¢ ciently similar and ine¢ cient (Observation 2).…”

Section: Introductionmentioning

confidence: 97%

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Choosing a licensee from heterogeneous rivals

Creane

Konishi

2013

Games and Economic Behavior

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We examine a …rm that can license its production technology to a rival when …rms are heterogeneous in production costs. We show that a complete technology transfer from one …rm to another always increases joint pro…t under weakly concave demand when at least three …rms remain in the industry. A jointly pro…table transfer may reduce social welfare, although a jointly pro…table transfer from the most e¢ cient …rm always increases welfare. We also consider two auction games under complete information: a standard …rst-price auction and a menu auction by Bernheim and Whinston (1986). With natural re…nement of equilibria, we show that the resulting licensees are ordered by degree of e¢ ciency: menu auction, simple auction, and joint-pro…t maximizing licensees, in (weakly) descending order. JEL:D4, L24, L4

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Section: Welfare E¤ectscontrasting

confidence: 57%

Section: Introductionmentioning

confidence: 97%

Choosing a licensee from heterogeneous rivals

Creane

Konishi

2013

Games and Economic Behavior

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“…2 See also Lahiri and Ono (1988), Konishi, Okuno-Fujiwara and Suzumura (1990), Konishi (1990Konishi ( , 1999, and Matsumura (2000).…”

Section: Introductionmentioning

confidence: 99%

Equilibrium number of firms and economic welfare in a spatial price discrimination model

Matsumura

Okamura

2006

Economics Letters

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“…7 The optimal policy is a subsidy schedule. While the government commits to the schedule in stage 1, the actual subsidy rate to each firm is determined when firms decide their product qualities in stage Figure 1.…”

Section: Proposition 1 Under Duopoly With Price Competition In Stage mentioning

confidence: 99%

OPTIMAL POLICY FOR PRODUCT R&D WITH ENDOGENOUS QUALITY ORDERING: ASYMMETRIC DUOPOLY*

Jinji

Toshimitsu

2006

Aust Econ Papers

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We examine the optimal R&D subsidy/tax policy under a vertically differentiated duopoly. In a significant departure from the existing work, we consider the case of asymmetric costs of product R&D where there is a small technology gap between firms. In our analysis, the endogeneity of quality ordering is explicitly taken into account. We show that the optimal policy is described by a firmspecific subsidy schedule that is contingent on firms' quality choices. The subsidy schedule not only corrects the distortion in product quality but also selects the socially preferred equilibrium. Both Bertrand and Cournot cases are analyzed.

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Helping Minor Firms Reduces Welfare

Cited by 237 publications

References 6 publications

Choosing a licensee from heterogeneous rivals

Choosing a licensee from heterogeneous rivals

Equilibrium number of firms and economic welfare in a spatial price discrimination model

OPTIMAL POLICY FOR PRODUCT R&D WITH ENDOGENOUS QUALITY ORDERING: ASYMMETRIC DUOPOLY*

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