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Supply chain innovations and partial ownership

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  • Hunold, Matthias
  • Shekhar, Shiva

Abstract

We show that competing downstream firms may rather invest in their inefficient inhouse production than help improve the technology of the efficient supplier, even if this is costless. Even worse, a downstream firm can have strong incentives to decrease the efficiency of the supplier in order to improve its outside options. We demonstrate that non-controlling partial backward ownership can align the incentives of the supplier and its customers with respect to supply chain innovations.

Suggested Citation

  • Hunold, Matthias & Shekhar, Shiva, 2018. "Supply chain innovations and partial ownership," DICE Discussion Papers 281, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    • Handle: RePEc:zbw:dicedp:281
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    References listed on IDEAS

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    Cited by:

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    3. Mariola Sánchez & José Antonio Belso‐Martínez & María José López‐Sánchez & Adrián Nerja, 2022. "Incentives to exclusive and non‐exclusive technology licensing under partial vertical integration," Manchester School, University of Manchester, vol. 90(2), pages 171-189, March.
    4. Hemant Bhargava & Antoine Dubus & David Ronayne & Shiva Shekhar, 2024. "The Strategic Value of Data Sharing in Interdependent Markets," CESifo Working Paper Series 10963, CESifo.

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    More about this item

    Keywords

    knowledge spillover; innovation; minority shareholdings; supply chain efficiency; vertical partial ownership;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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