IPRs protection's influences on FDI — Based on bertrand competition

A duopoly two-stage gambling model is set, composed by enterprises in the developed and the developing countries, based on Bertrand competition, in order to clear the relationship between the IPR protection degree and the firm's market performance in non-heated price competition. The model supposes that products have the horizontal and vertical difference, the developed country enterprise carries on the product R&D investment. The non-cooperation Cournot-equilibrium solution is found adopting backward induction. Influences of IPR protection degree in non-developed countries on market performance is examined when non-developed countries whether there exists or not production cost advantages. Influence of IPR protection of non-developed countries on market performance is studied when product R&D input is conducted by developed countries. The study indicates that the IPR protection degree of non-developed countries, the country in which the product market exists and the cost advantage size of non-developed countries will impact on whether the developed countries make the decision to input product R&D and impact on the firm's market performance when the products have the horizontal and vertical difference.