Abstract:This study clarifies how governments' industrial policies affect the firm's R&D choice when firms simultaneously conduct both costreducing process and qualityimproving product R&D. We found the following results. Under Cournot competition, while output increases when quality improves and/or the production cost decreases, output decreases as the proportion of product R&D becomes higher compared to that of process R&D. Under Bertrand competition, whether prices become higher or lower depends on the degree of fra… Show more
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