Advanced Search
MyIDEAS: Login to save this article or follow this journal

Vertical R&D Spillovers, Cooperation, Market Structure, and Innovation

Contents:

Author Info

  • Gamal Atallah

Abstract

This paper studies vertical R&D spillovers between upstream and downstream firms. The model incorporates two vertically related industries, with horizontal spillovers within each industry and vertical spillovers between the two industries. Four types of R&D cooperation are studied: no cooperation, horizontal cooperation, vertical cooperation, and simultaneous horizontal and vertical cooperation. Vertical spillovers always increase R&D and welfare, while horizontal spillovers may increase or decrease them. The comparison of cooperative settings in terms of R&D shows that no setting uniformly dominates the others. Which type of cooperation yields more R&D depends on horizontal and vertical spillovers, and market structure. The ranking of cooperative structures hinges on the signs and magnitudes of three "competitive externalities" (vertical, horizontal, and diagonal) which capture the effect of the R&D of a firm on the profits of other firms. One of the basic results of the strategic investment literature is that cooperation between competitors decreases R&D when horizontal spillovers are low; the model shows that this result does not necessarily hold when vertical spillovers are sufficiently high, and/or when horizontal cooperation is combined with vertical cooperation.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.tandfonline.com/doi/abs/10.1080/10438590210903
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 11 (2002)
Issue (Month): 3 ()
Pages: 179-209

as in new window
Handle: RePEc:taf:ecinnt:v:11:y:2002:i:3:p:179-209

Contact details of provider:
Web page: http://www.tandfonline.com/GEIN20

Order Information:
Web: http://www.tandfonline.com/pricing/journal/GEIN20

Related research

Keywords: Vertical R&D Spillovers; Market Structure; Innovation; Vertical R&D Cooperation; R&D Policy;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Harhoff, Dietmar, 1991. "R&D incentives and spillovers in a two-industry model," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 91-06, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Teece, David J., 1992. "Competition, cooperation, and innovation : Organizational arrangements for regimes of rapid technological progress," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 18(1), pages 1-25, June.
  3. Aghion, Philippe & Tirole, Jean, 1994. "The Management of Innovation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 109(4), pages 1185-1209, November.
  4. Goto, Akira & Suzuki, Kazuyuki, 1989. "R&D Capital, Rate of Return on R&D Investment and Spillover of R&D in Japanese Manufacturing Industries," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 71(4), pages 555-64, November.
  5. Andreas IRMEN., 1996. "Mark-Up Pricing and Bilateral Monopoly," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP), Université de Lausanne, Faculté des HEC, DEEP 9622, Université de Lausanne, Faculté des HEC, DEEP.
  6. Jorde, Thomas M & Teece, David J, 1990. "Innovation and Cooperation: Implications for Competition and Antitrust," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 4(3), pages 75-96, Summer.
  7. Hagedoorn, John & Link, Albert N. & Vonortas, Nicholas S., 2000. "Research partnerships1," Research Policy, Elsevier, Elsevier, vol. 29(4-5), pages 567-586, April.
  8. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, American Economic Association, vol. 82(5), pages 1293-306, December.
  9. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, Elsevier, vol. 13(6), pages 343-373, December.
  10. J. Poyago-Theotoky,, . "R&D Competition with Asymmetric Firms," Discussion Papers, University of Nottingham, School of Economics 96/13, University of Nottingham, School of Economics.
  11. Bruno Cassiman & Reinhilde Veugelers, 1998. "R&D cooperation and spillovers: Some empirical evidence," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 328, Department of Economics and Business, Universitat Pompeu Fabra.
  12. Ward, Michael R & Dranove, David, 1995. "The Vertical Chain of Research and Development in the Pharmaceutical Industry," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 33(1), pages 70-87, January.
  13. VanderWerf, Pieter A., 1992. "Explaining downstream innovation by commodity suppliers with expected innovation benefit," Research Policy, Elsevier, Elsevier, vol. 21(4), pages 315-333, August.
  14. Aghion, P. & Tirole, J., 1993. "On the Management of Innovation," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 93-12, Massachusetts Institute of Technology (MIT), Department of Economics.
  15. Poyago-Theotoky, Joanna, 1995. "Equilibrium and Optimal Size of a Research Joint Venture in an Oligopoly with Spillovers," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 43(2), pages 209-26, June.
  16. Greenhut, M L & Ohta, H, 1979. "Vertical Integration of Successive Oligopolists," American Economic Review, American Economic Association, American Economic Association, vol. 69(1), pages 137-41, March.
  17. Mansfield, Edwin, 1985. "How Rapidly Does New Industrial Technology Leak Out?," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 34(2), pages 217-23, December.
  18. Bester, Helmut & Petrakis, Emmanuel, 1993. "The incentives for cost reduction in a differentiated industry," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 11(4), pages 519-534.
  19. Ron Jarmin, 1993. "Asymmetric Learning Spillovers," Working Papers, Center for Economic Studies, U.S. Census Bureau 93-7, Center for Economic Studies, U.S. Census Bureau.
  20. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 862, Cowles Foundation for Research in Economics, Yale University.
  21. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 783-832.
  22. Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, American Economic Association, vol. 82(5), pages 1307-20, December.
  23. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, National Bureau of Economic Research, Inc, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  24. Rafael Moner-Colonques & Jose Jorge Sempere-Monerris, 2000. "Cooperation In R&D With Spillovers And Delegation Of Sales," Economics of Innovation and New Technology, Taylor & Francis Journals, Taylor & Francis Journals, vol. 9(5), pages 401-420.
  25. Leahy, Dermot & Neary, J Peter, 1995. "Public Policy Towards R&D in Oligopolistic Industries," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1243, C.E.P.R. Discussion Papers.
  26. d'Aspremont, Claude & Jacquemin, Alexis, 1988. "Cooperative and Noncooperative R&D in Duopoly with Spillovers," American Economic Review, American Economic Association, American Economic Association, vol. 78(5), pages 1133-37, December.
  27. Dasgupta, Partha & Stiglitz, Joseph, 1980. "Industrial Structure and the Nature of Innovative Activity," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 90(358), pages 266-93, June.
  28. Chongwoo Choe, 1998. "Two Comments on the Industrial Organisation of Vertically Related Markets," Working Papers, School of Economics, La Trobe University 1998.03, School of Economics, La Trobe University.
  29. Ruff, Larry E., 1969. "Research and technological progress in a cournot economy," Journal of Economic Theory, Elsevier, Elsevier, vol. 1(4), pages 397-415, December.
  30. Jeffrey I. Bernstein, 1988. "Costs of Production, Intra- and Interindustry R&D Spillovers: Canadian Evidence," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 21(2), pages 324-47, May.
  31. Jeffrey Bernstein & Ishaq Nadiri, 1988. "Interindustry R&D Spillovers, Rates of Return, and Production in High-Tech Industries," Carleton Industrial Organization Research Unit (CIORU), Carleton University, Department of Economics 88-01, Carleton University, Department of Economics.
  32. Fudenberg, Drew & Tirole, Jean, 1984. "The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and Hungry Look," American Economic Review, American Economic Association, American Economic Association, vol. 74(2), pages 361-66, May.
  33. Steurs, Geert, 1995. "Inter-industry R&D spillovers: What difference do they make?," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 13(2), pages 249-276.
  34. Kamien, Morton I & Zang, Israel, 1993. "Competing Research Joint Ventures," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 2(1), pages 23-40, Spring.
  35. Wolfgang Becker & Jurgen Peters, 1998. "R&D-Competition Between Vertical Corporate Networks: Market Structure and Strategic R&D-Spillovers," Economics of Innovation and New Technology, Taylor & Francis Journals, Taylor & Francis Journals, vol. 6(1), pages 51-72.
  36. Boivin, Caroline & Vencatachellum, Désiré, 1998. "Externalités et coopération en recherche et développement : une reconceptualisation," L'Actualité Economique, Société Canadienne de Science Economique, Société Canadienne de Science Economique, vol. 74(4), pages 633-649, décembre.
  37. Geroski, P A, 1992. "Vertical Relations between Firms and Industrial Policy," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 102(410), pages 138-47, January.
  38. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, Econometric Society, vol. 52(1), pages 101-21, January.
  39. W. Salant, Stephen & Shaffer, Greg, 1998. "Optimal asymmetric strategies in research joint ventures," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 16(2), pages 195-208, March.
  40. Adam B. Jaffe, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits and Market Value," NBER Working Papers 1815, National Bureau of Economic Research, Inc.
  41. Kim B. Clark & W. Bruce Chew & Takahiro Fujimoto, 1987. "Product Development in the World Auto Industry," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 729-782.
  42. Kesteloot, Katrien & Veugelers, Reinhilde, 1995. "Stable R&D Cooperation with Spillovers," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 4(4), pages 651-72, Winter.
  43. Young, Allan Richard, 1991. "Vertical Structure and Nash Equilibrium: A Note," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 39(6), pages 717-22, December.
  44. Wolff, Edward N. & Ishaq Nadiri, M., 1993. "Spillover effects, linkage structure, and research and development," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 4(2), pages 315-331, December.
  45. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
  46. Delbono, Flavio & Denicolo, Vincenzo, 1990. "R & D investment in a symmetric and homogeneous oligopol : Bertrand vs Cournot," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 8(2), pages 297-313, June.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Khazabi, Massoud & Quyen, Nguyen, 2011. "R&D Spillovers, Innovation, and Entry," MPRA Paper 39460, University Library of Munich, Germany.
  2. Gallié, Emilie-Pauline & Roux, Pascale, 2010. "Forms and Determinants of R&D Collaborations: Evidence Based on French Data," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/6963, Paris Dauphine University.
  3. Constantine Manasakis & Emmanuel Petrakis & Vasileios Zikos, 2014. "Downstream Research Joint Venture with Upstream Market Power," Southern Economic Journal, Southern Economic Association, Southern Economic Association, vol. 80(3), pages 782-802, January.
  4. Gallié, Emilie-Pauline & Roux, Pascale, 2008. "Forms and Determinants of R&D Collaborations: New Evidence on French Data," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/5009, Paris Dauphine University.
  5. Uwe Cantner & Andreas Meder, 2006. "Die Wirkung von Forschungskooperationen auf den Unternehmenserfolg - eine Fallstudie zum Landkreis Saalfeld Rudolstadt," Jenaer Schriften zur Wirtschaftswissenschaft, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät 24/2006, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
  6. Bonte, Werner & Keilbach, Max, 2005. "Concubinage or marriage? Informal and formal cooperations for innovation," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 23(3-4), pages 279-302, April.
  7. Belderbos,René & Carree,Martin & Lokshin,Boris, 2004. "Cooperative R&D and Firm Performance," Research Memorandum, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) 022, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  8. Belderbos, René & Carree, Martin & Lokshin, Boris, 2006. "Complementarity in R&D cooperation strategies," Research Memorandum, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) 013, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  9. Bönte, Werner & Dienes, Christian, 2012. "Energy and Material Efficiency Innovations: The Relevance of Innovation Strategies," Schumpeter Discussion Papers, Universitätsbibliothek Wuppertal, University Library sdp12001, Universitätsbibliothek Wuppertal, University Library.
  10. Constantine Manasakis & Dusanee Kesavayuth & Vasileios Zikos, 2012. "Upstream R&D networks," Working Papers, University of Crete, Department of Economics 1201, University of Crete, Department of Economics.
  11. Werner Bönte & Lars Wiethaus, 2005. "Knowledge Transfer in Buyer-Supplier Relationships – When It (Not) Occurs," RWI Discussion Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung 0034, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  12. G. Rossini, 2005. "Pitfalls in private and social incentives of vertical crossborder outsourcing," Working Papers, Dipartimento Scienze Economiche, Universita' di Bologna 536, Dipartimento Scienze Economiche, Universita' di Bologna.
  13. Kesavayuth, Dusanee & Zikos, Vasileios, 2012. "Upstream and downstream horizontal R&D networks," Economic Modelling, Elsevier, Elsevier, vol. 29(3), pages 742-750.
  14. Khazabi, Massoud & Quyen, Nguyen, 2008. "Competition and innovation with horizontal R&D spillovers," MPRA Paper 39453, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:taf:ecinnt:v:11:y:2002:i:3:p:179-209. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.