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Downstream R&D, raising rival's costs, and input-price contracts: a comment on the role of spillovers

Author

Listed:
  • Vasileios Zikos

    () (University of Surrey, Department of Economics and University of the Thai Chamber of Commerce)

  • Dusanee Kesavayuth

    () (University of Chicago-UTCC Research Center, University of the Thai Chamber of Commerce)

Abstract

We reconsider Banerjee and Lin [International Journal of Industrial Organization, 2003] by investigating the role of spillovers (or informational flows) for the profitability of input-price contracts in a vertically related industry. We show that spillovers influence the relative magnitude of the main forces operating in the model, which can either reinforce or alter some of the predictions.

Suggested Citation

  • Vasileios Zikos & Dusanee Kesavayuth, 2010. "Downstream R&D, raising rival's costs, and input-price contracts: a comment on the role of spillovers," Economics Bulletin, AccessEcon, vol. 30(4), pages 3018-3025.
  • Handle: RePEc:ebl:ecbull:eb-10-00503
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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I4-P277.pdf
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    Citations

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    Cited by:

    1. Maria Alipranti & Chrysovalantou Miliou & Emmanuel Petrakis, 2014. "On Vertical Relations and Technology Adoption Timing," Working Papers 1502, University of Crete, Department of Economics.
    2. Takauchi, Kazuhiro, 2016. "Profit-reducing fixed-price contract: The role of the transport sector," MPRA Paper 71413, University Library of Munich, Germany.
    3. Kazuhiro Takauchi & Tomomichi Mizuno, 2017. "Solving a hold-up problem may harm all firms: downstream R&D and transport-price contracts," Discussion Papers 1707, Graduate School of Economics, Kobe University.

    More about this item

    Keywords

    Input-price contracts; Input supplier; R&D; Spillovers;

    JEL classification:

    • L0 - Industrial Organization - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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