TITLE:
Product R&D Rivalry and Quality Policy in an International Industry Composed of Firms from Capitalist and Post-Communist Countries
AUTHORS:
Yasunori Ishii
KEYWORDS:
International Mixed Duopoly, Post-Communist Country, Quality Competition, Quality Policy
JOURNAL NAME:
Open Journal of Political Science,
Vol.8 No.3,
July
24,
2018
ABSTRACT: Modeling an international mixed duopoly composed of a private firm from a
capitalist country (CC), and a state firm from a post-communist country (PCC) that
choose outputs and product qualities under quality policies of their
governments, we analyze the firms’ output-quality rivalry and the governments’ quality
policies. We find that when the PCC’s state firm is partially or perfectly
privatized, an increase in the quality subsidy of each country raises its
firm’s output, product quality and market share, but decreases those of its
rival firm, and both the quality policies of the CC and PCC are the subsidy
policies. However, when the PCC’s state firm is completely nationalized, while
a change in the quality subsidy of the CC has the similar effects as those
mentioned above, a change in the quality subsidy of the PCC has no effect on
the firms’ outputs, product qualities and market shares, which means that the
optimal quality policy of the CC is the subsidy policy, but that of the PCC is
to do nothing.