Three essays in industrial organisation

In this thesis, we analyse the strategies and related policies of firms when the market is not perfectly competitive and an externality exists. In Chapter 2, we consider the research and development (R&D) strategies of two firms seeking a new technology and their competition in the market in the post- innovation period. The strategies of both firms are discussed deeply and separately. The primary point is that the two firms are heterogeneous in their market powers in the market for their products. Then, we examine the major policy issues for this scenario and identify several problems with current policies. In Chapter 3, we introduce the risk aversion of the firms into the R&D investment model, the main structure of which is same as the model discussed in Chapter 2. The model shows that because of risk aversion, the incumbent monopolist or more established firm has greater incentive to invest in R&D than the other firm in most cases and is more likely to keep its position in the market (i.e., the monopoly is maintained). As a result, there is no need to assume heterogeneity in the market power of firms in the post- innovation period in the product market. These two chapters try to answer the classic question of whether the incumbent monopolist can maintain its position or if a new potential entrant to the market is possible. In Chapter 4, we discuss the effect of environmental taxation on a monopolist when consumers are aware of environmental problems. We assume that taxes are imposed on the technology the monopolist uses, not on the profit of the monopolist, as assumed in many prior i studies in the literature. Although consumer awareness of environmental issues does not have sufficient power to encourage the monopolist to use the socially optimal technology, such awareness has some effect in controlling the monopolist.EThOS - Electronic Theses Online ServiceGBUnited Kingdo