Market Structure, Organizational Structure, and R&D Diversity
AbstractWe examine the effects of market structure and the internal organization of firms on equilibrium R&D projects. We compare a monopolistâ€™s choice of R&D portfolio to that of a welfare maximizer. We next show that Sah and Stiglitzâ€™s finding that the market portfolio of R&D is independent of the number of firms under Bertrand competition extends to neither Cournot oligopoly nor a cartel. We also show that the ability of firms to pre-empt R&D by rivals along particular research paths can lead to socially excessive R&D diversification. Lastly, using Sah and Stiglitzâ€™s definition of hierarchy, we establish conditions under which larger hierarchies invest in smaller portfolios.
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Bibliographic InfoPaper provided by Competition Policy Center, Institute for Business and Economic Research, UC Berkeley in its series Competition Policy Center, Working Paper Series with number qt8md3920f.
Date of creation: 09 Sep 2002
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Internal organization; market power; research and development;
Other versions of this item:
- Joseph Farrell & Richard J. Gilbert & Michael L. Katz, 2003. "Market Structure, Organizational Structure, and R&D Diversity," Industrial Organization 0303006, EconWPA.
- Farrell, Joseph & Gilbert, Richard J. & Katz, Michael L., 2002. "Market Structure, Organizational Structure, and R&D Diversity," Department of Economics, Working Paper Series qt2pn5t5nj, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Farrell, Joseph & Gilbert, Richard & Katz, Michael, 2002. "Market Structure, Organizational Structure, and R&D Diversity," Department of Economics, Working Paper Series qt8c33r9d7, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
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.:
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- Sah, Raaj Kumar & Stiglitz, Joseph E, 1985. "Human Fallibility and Economic Organization," American Economic Review, American Economic Association, vol. 75(2), pages 292-97, May.
- Ross, Stephen A, 1981. "Some Stronger Measures of Risk Aversion in the Small and the Large with Applications," Econometrica, Econometric Society, vol. 49(3), pages 621-38, May.
- Francesco Laforgia & Fabio Montobbio & Luigi Orsenigo, 2007. "IPRs, technological and industrial development and growth: the case of the pharmaceutical industry," KITeS Working Papers 206, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Oct 2007.
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