Creación de demanda e reducción de custos baixo ameaza de entrada
ISSN: 1132-2799
Year of publication: 2001
Volume: 10
Issue: 1
Pages: 35-62
Type: Article
More publications in: Revista galega de economía: Publicación Interdisciplinar da Facultade de Ciencias Económicas e Empresariais
Abstract
This paper examines an entry game in which the incumbent firm of a given industry has –when it faces the entry threat of an entrant which produces a substitute good– leadership both simultaneously on demand-creating advertising and cost-reducing R&D investments. Ad-vertising expenditure has spillover effects, whereas R&D investment is fully internalized. It is shown that the combination of both commitments gives rise to such cross strategic effects that, under no restrictive conditions about parameters measuring the spillover degree of advertising, the productive efficiency of advertising, and the productive efficiency of R&D expenditures, may roundly modify the incumbent’s strategic behavior with regard to its conduct from the respective one-di-mensional investment settings.