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Régime de Tarification de l'Input dans un modèle avec Innovation de Produit en Amont et en Aval
[Input Pricing in a Model with Upstream and Downstream Product Innovation]

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  • EL ELJ, Moez

Abstract

In this paper, we analyze the incentives for improving-quality R&D in a two-tier marketstructure where the quality of a differentiated good depends on the specific R&D of a downstream oligopoly and the R&D of an upstream monopoly. We show that input pricing is determining for the incentives for innovation in upstream and downstream industry. Fixed price agreements promote innovation in downstream and upstream industry by eliminating the opportunistic behaviour of the input supplier and are welfare enhancing. Theses agreements are all the more effective as the weight of the quality of the input in the consumer’s perception of the total quality of the final good is significant and as the goods are strongly differentiated.

Suggested Citation

  • EL ELJ, Moez, 2008. "Régime de Tarification de l'Input dans un modèle avec Innovation de Produit en Amont et en Aval [Input Pricing in a Model with Upstream and Downstream Product Innovation]," MPRA Paper 8237, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:8237
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    References listed on IDEAS

    as
    1. Banerjee, Samiran & Lin, Ping, 2001. "Vertical research joint ventures," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 285-302, January.
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    More about this item

    Keywords

    Product Innovation; Vertical Market - Technological Spillovers - Input pricing;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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