Minimum quality standards for product R&D under Cournot and Bertrand competition

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This paper investigates how the government sets minimum quality standards for duopolistic firms’ product innovation under Cournot and Bertrand competition. It turns out that Bertrand competition induces the government to set a higher MQS than Cournot competition, thus leading to more R&D investment. As products become more similar and patent protection becomes more perfect, the government will reduce minimum quality standards regardless of whether duopolistic firms are engaged in Cournot or Bertrand competition.