R&D Incentives in Vertically Related Markets
AbstractThis paper focuses on incentives to invest in research and development (R&D) in vertically related markets. In a bilateral duopoly setup, we consider how process R&D incentives of the firms in both upstream and downstream market depend on the intensity of simultaneous interbrand and intrabrand competition. Among the results: both interbrand and intrabrand competition have twofold effects on R&D incentives. Existence of a vertically related market with imperfect competition lowers both the incentives to invest in process R&D and the competitive advantage through the R&D investment. We will show how the impact of a firm's R&D investments in either market on consumer surplus as well as on the profits of all firms in both markets depends on exogenous parameters.
Download InfoIf 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.
Bibliographic InfoPaper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201307.
Length: 33 pages
Date of creation: 2013
Date of revision:
Publication status: Forthcoming in
research and development; vertical relations; bilateral oligopoly; product differentiation; process innovation; interbrand and intrabrand competition;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-09 (All new papers)
- NEP-COM-2013-03-09 (Industrial Competition)
- NEP-CSE-2013-03-09 (Economics of Strategic Management)
- NEP-IND-2013-03-09 (Industrial Organization)
- NEP-INO-2013-03-09 (Innovation)
- NEP-TID-2013-03-09 (Technology & Industrial Dynamics)
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.:
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
- Inderst, Roman & Wey, Christian, 2003.
" Bargaining, Mergers, and Technology Choice in Bilaterally Oligopolistic Industries,"
RAND Journal of Economics,
The RAND Corporation, vol. 34(1), pages 1-19, Spring.
- Roman Inderst & Christian Wey, 2001. "Bargaining, Mergers, and Technology Choice in Bilaterally Oligopolistic Industries," CIG Working Papers FS IV 01-19, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Inderst, Roman & Wey, Christian, 2001. "Bargaining, Mergers and Technology Choice in Bilaterally Oligopolistic Industries," CEPR Discussion Papers 2981, C.E.P.R. Discussion Papers.
- Chen, Yongmin, 2001.
"On Vertical Mergers and Their Competitive Effects,"
RAND Journal of Economics,
The RAND Corporation, vol. 32(4), pages 667-85, Winter.
- Yongmin Chen, 2000. "On Vertical Mergers and Their Competitive Effects," Econometric Society World Congress 2000 Contributed Papers 0383, Econometric Society.
- Chen, Zhiqi, 2003.
" Dominant Retailers and the Countervailing-Power Hypothesis,"
RAND Journal of Economics,
The RAND Corporation, vol. 34(4), pages 612-25, Winter.
- Zhiqi Chen, 2001. "Dominant Retailers and the Countervailing Power Hypothesis," Carleton Economic Papers 01-05, Carleton University, Department of Economics, revised 2003.
- Masahiro Abiru & Babu Nahata & Subhashis Raychaudhuri & Michael Waterson, 2003.
"Equilibrium structures in vertical oligopoly,"
General Economics and Teaching
- Géarard Gaudet & Ngo Long, 1996.
"Vertical Integration, Foreclosure, and profits in the Presence of Double Marginalization,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 5(3), pages 409-432, 09.
- Gérard Gaudet & Ngo Van Long, 1995. "Vertical Integration, Foreclosure and Profits in the Presence of Double Marginalisation," CIRANO Working Papers 95s-40, CIRANO.
- Gérard Gaudet & Ngo Van Long, 1993. "Vertical Integration, Foreclosure and Profits in the Presence of Double Marginalisation," Cahiers de recherche du DÃ©partement des sciences Ã©conomiques, UQAM 9308, Université du Québec à Montréal, Département des sciences économiques.
- Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-21, January.
- von Ungern-Sternberg, Thomas, 1996. "Countervailing power revisited," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 507-519, June.
- Ted O'Donoghue & Josef Zweim¸ller, 2004.
"Patents in a Model of Endogenous Growth,"
Journal of Economic Growth,
Springer, vol. 9(1), pages 81-123, 03.
- Lin, Ping & Saggi, Kamal, 2002. "Product differentiation, process R&D, and the nature of market competition," European Economic Review, Elsevier, vol. 46(1), pages 201-211, January.
- Jeroen Hinloopen & Jan Vandekerckhove, 2007. "Dynamic Efficiency of Product Market Competition," Tinbergen Institute Discussion Papers 07-097/1, Tinbergen Institute.
- Laurent Linnemer, 2003. "Backward Integration by a Dominant Firm," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(2), pages 231-259, 06.
- Ordover, Janusz A & Saloner, Garth & Salop, Steven C, 1990. "Equilibrium Vertical Foreclosure," American Economic Review, American Economic Association, vol. 80(1), pages 127-42, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bernd Hayo).
If references are entirely missing, you can add them using this form.