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Downstream R&D, raising rival's costs, and input-price contracts: a comment on the role of spillovers

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  • Vasileios Zikos

    ()
    (University of Surrey, Department of Economics and University of the Thai Chamber of Commerce)

  • Dusanee Kesavayuth

    ()
    (University of Chicago-UTCC Research Center, University of the Thai Chamber of Commerce)

Abstract

We reconsider Banerjee and Lin [International Journal of Industrial Organization, 2003] by investigating the role of spillovers (or informational flows) for the profitability of input-price contracts in a vertically related industry. We show that spillovers influence the relative magnitude of the main forces operating in the model, which can either reinforce or alter some of the predictions.

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File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I4-P277.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 30 (2010)
Issue (Month): 4 ()
Pages: 3018-3025

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Handle: RePEc:ebl:ecbull:eb-10-00503

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Keywords: Input-price contracts; Input supplier; R&D; Spillovers;

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