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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.

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File URL: http://mpra.ub.uni-muenchen.de/8237/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8237.

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Date of creation: 11 Apr 2008
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Handle: RePEc:pra:mprapa:8237

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Related research

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

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  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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