Disclosure Policy, and Competition and Cartelization in R&D: Cournot and Bertrand Competition

This paper considers whether firms have incentives to disclose their R&D information to their rivals in Cournot−quantity setting and Bertrand−price setting models. Furthermore, we compare market performances, e.g. R&D investments, prices and profits, in these models. It is shown that whether they have such incentives depends only on the signs of cross−price effects in demand functions, irrespective of the type of competition, e.g. Cournot or Bertrand competition. When making comparisons of them among four modes, we find that the formation of R&D cartels tends to increase the expenditure of R&D investment and then gains more profits. Alternatively, we point out that quantity−setting firms gain more profits in the presence of R&D cooperation than in the absence of it when products are substitutes in terms of Cournot competition