한국생산성학회

We set up a simple international trade model with two countries hosting one imperfectly, competitive firm each. Each firm produces a differentiated product and invests in process R&D which decreases its marginal cost of production. We consider two different international markets. One is the international market without a leader in which two firms simultaneously choose investment in process R&D and output. The other is the international market with a leader in which a leading firm chooses its investment in process R&D and output and then a following firm chooses its investment in process R&D and output. For example, Microsoft in the software industry is a leading firm in the domestic market and the international market. We derive and compare the equilibrium level of process R&D, output, and profit from the international markets without a leader and with one. It is shown that: (i) investment in process R&D and export in each country decrease as trade costs increase in equilibrium, but output for the domestic market increases as trade costs increase if the goods are relatively less differentiated and R&D is relatively less efficient and output for the domestic market decreases as trade costs increase if the goods are relatively more differentiated and R&D is relatively more efficient; (ii) a leading (following) firm invests more (less) in process R&D and produces more (less) output in the international market with a leader than an individual firm in the international market without one if the goods are relatively more differentiated and R&D is relatively less efficient and a leading (following) firm invests less (more) in process R&D and produces less (more) output in the international market with a leader than an individual firm in the international market without one if the goods are relatively less differentiated and R&D is relatively more efficient; (iii) the aggregate level of process R&D is higher in the international market with leader than without one; and (iv) a leading (following) firm has more (less) profit in the international market with a leader than an individual firm in the international market without one if the goods are relatively more differentiated and R&D is relatively less efficient and a leading (following) firm has less (more) profit in the international market with a leader than an individual firm in the international market without one if the goods are relatively less differentiated and R&D is relatively more efficient.