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Cooperative R&D With Differentiated Products In Vertically Related Industries

Author

Listed:
  • Parisa Pourkarimi

    (Department of Economics, Carleton University, Ottawa)

  • Gamal Atallah

    (Department of Economics, University of Ottawa)

Abstract

This paper studies the impact of cooperative R&D on innovation, welfare, and profitability in vertically related industries with differentiated products. The model incorporates two vertically related industries, with horizontal spillovers within industries and vertical spillovers between them. Upstream firms produce a homogeneous intermediate good, while downstream firms provide differentiated products. Three types of R&D cooperation are studied: no cooperation, horizontal cooperation, and vertical cooperation. The comparison of cooperation settings in terms of R&D and profitability shows that although vertical cooperation yields higher innovation and welfare, it may lead to over–investment in R&D.

Suggested Citation

  • Parisa Pourkarimi & Gamal Atallah, 2020. "Cooperative R&D With Differentiated Products In Vertically Related Industries," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 18(2), pages 3-16, November.
    • Handle: RePEc:tuz:journl:v:18:y:2020:i:2:p:3-16
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    References listed on IDEAS

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    More about this item

    Keywords

    vertical spillovers; horizontal spillovers; product differentiation; R&D cooperation;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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