Downstream R&D, raising rivals' costs, and input price contracts

被引：53
|
作者：
Banerjee, S
Lin, P [1 ]
机构：
[1] Lingnan Univ, Dept Econ, Tuen Mun, Hong Kong, Peoples R China
[2] Georgia Inst Technol, Sch Econ, Atlanta, GA 30332 USA
来源：
INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION | 2003年 / 21卷 / 01期
关键词：
vertical R&D; raising rivals' cost; fixed-price contract;
D O I：
10.1016/S0167-7187(02)00010-3
中图分类号：
F [经济];
学科分类号：
02 ;
摘要：
We analyze the incentives for cost-reducing R&D by downstream firms in a two-tier market structure. By increasing the demand for an input, downstream R&D allows the upstream firm to raise its input price. This lowers the benefit of R&D to a downstream firm but raises its rivals' costs. As a result, a downstream oligopolist may invest more in R&D than a downstream monopolist, a phenomenon that is absent in a purely horizontal R&D setting. Fixed-price agreements (where the input price remains unchanged following downstream R&D) promote innovation by eliminating the opportunistic behavior of the input supplier and are welfare enhancing. (C) 2003 Elsevier Science B.V. All rights reserved.
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页码：79 / 96
页数：18
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