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Downstream Research Joint Venture with Upstream Market Power

Author Info

Listed author(s):
  • Constantine Manasakis

    ()

    (Department of Political Science, University of Crete, Düsseldorf Institute for Competition Economics (DICE), Heinrich-Heine Universität Düsseldorf; corresponding author)

  • Emmanuel Petrakis

    ()

    (?Department of Economics, University of Crete, University Campus at Gallos, Rethymnon 74100, Greece;)

  • Vasileios Zikos

    ()

    (?Research Institute for Policy Evaluation and Design, University of the Thai Chamber of Commerce, 126/1 Vibhavadee-Rangsit Road, Dindaeng, Bangkok, 10400, Thailand;)

Abstract

In a vertically related industry, we examine the downstream firms' incentives to invest in cost-reducing Research and Development (R&D), and to form a Research Joint Venture (RJV), under two alternative structures of input supply: exclusive vertical relations and a single supplier. In contrast to the “hold-up” argument, in which downstream firms invest non-cooperatively and spillovers are low, R&D investments are higher under a single supplier than under competing vertical chains. Downstream firms' incentives to form a RJV are also stronger in the former case than they are in the latter. We identify conditions under which an RJV is beneficial for society. Integrated innovation and competition policies are also discussed.

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File URL: http://dx.doi.org/10.4284/0038-4038-2012.110
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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 80 (2014)
Issue (Month): 3 (January)
Pages: 782-802

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Handle: RePEc:sej:ancoec:v:80:3:y:2014:p:782-802
Contact details of provider: Web page: http://www.southerneconomic.org/

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Find related papers by JEL classification:
  • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
  • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
  • 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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  1. d'Aspremont, Claude & Jacquemin, Alexis, 1988. "Cooperative and Noncooperative R&D in Duopoly with Spillovers," American Economic Review, American Economic Association, vol. 78(5), pages 1133-1137, December.
  2. Roberto Hern·n & Pedro L. MarÌn & Georges Siotis, 2003. "An empirical evaluation of the determinants of Research Joint Venture Formation," Journal of Industrial Economics, Wiley Blackwell, vol. 51(1), pages 75-89, 03.
  3. Amir, Rabah & Evstigneev, Igor & Wooders, John, 2003. "Noncooperative versus cooperative R&D with endogenous spillover rates," Games and Economic Behavior, Elsevier, vol. 42(2), pages 183-207, February.
  4. Gamal Atallah, 2002. "Vertical R&D Spillovers, Cooperation, Market Structure, and Innovation," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(3), pages 179-209.
  5. Bruno Cassiman & Reinhilde Veugelers, 1998. "R&D cooperation and spillovers: Some empirical evidence," Economics Working Papers 328, Department of Economics and Business, Universitat Pompeu Fabra.
  6. Masao Nakamura & Yannis Caloghirou & George Hondroyiannis & Nicholas S. Vonortas, 2003. "The performance of research partnerships," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(2-3), pages 85-99.
  7. W. Salant, Stephen & Shaffer, Greg, 1998. "Optimal asymmetric strategies in research joint ventures," International Journal of Industrial Organization, Elsevier, vol. 16(2), pages 195-208, March.
  8. Poyago-Theotoky, Joanna, 1995. "Equilibrium and Optimal Size of a Research Joint Venture in an Oligopoly with Spillovers," Journal of Industrial Economics, Wiley Blackwell, vol. 43(2), pages 209-226, June.
  9. Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, vol. 82(5), pages 1307-1320, December.
  10. Lambertini, Luca & Poddar, Sougata & Sasaki, Dan, 2002. "Research joint ventures, product differentiation, and price collusion," International Journal of Industrial Organization, Elsevier, vol. 20(6), pages 829-854, June.
  11. Belderbos, Rene & Carree, Martin & Diederen, Bert & Lokshin, Boris & Veugelers, Reinhilde, 2004. "Heterogeneity in R&D cooperation strategies," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1237-1263, November.
  12. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-1306, December.
  13. Yi, Sang-Seung & Shin, Hyukseung, 2000. "Endogenous formation of research coalitions with spillovers," International Journal of Industrial Organization, Elsevier, vol. 18(2), pages 229-256, February.
  14. Ziss, Steffen, 1994. "Strategic R&D with Spillovers, Collusion and Welfare," Journal of Industrial Economics, Wiley Blackwell, vol. 42(4), pages 375-393, December.
  15. Benfratello, Luigi & Sembenelli, Alessandro, 2002. "Research joint ventures and firm level performance," Research Policy, Elsevier, vol. 31(4), pages 493-507, May.
  16. Yannis Caloghirou & Stavros Ioannides & Nicholas S. Vonortas, 2003. "Research Joint Ventures," Journal of Economic Surveys, Wiley Blackwell, vol. 17(4), pages 541-570, 09.
  17. Miyagiwa, Kaz & Ohno, Yuka, 2002. "Uncertainty, spillovers, and cooperative R&D," International Journal of Industrial Organization, Elsevier, vol. 20(6), pages 855-876, June.
  18. Cabral, Luis M. B., 2000. "R&D cooperation and product market competition," International Journal of Industrial Organization, Elsevier, vol. 18(7), pages 1033-1047, October.
  19. Katsoulacos, Yannis & Ulph, David, 1998. "Endogenous Spillovers and the Performance of Research Joint Ventures," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 333-357, September.
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Cited by:

  1. Tran, Tat Thanh & Zikos, Vasileios, 2017. "R&D networks among suppliers and manufacturers," Economic Modelling, Elsevier, vol. 60(C), pages 151-161.
  2. Maria Alipranti & Chrysovalantou Miliou & Emmanuel Petrakis, 2014. "On Vertical Relations and Technology Adoption Timing," Working Papers 1502, University of Crete, Department of Economics.
  3. Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2015. "On vertical relations and the timing of technology adoption," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 117-129.

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