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Downstream Research Joint Venture with Upstream Market Power

Author

Listed:
  • 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.

Suggested Citation

  • Constantine Manasakis & Emmanuel Petrakis & Vasileios Zikos, 2014. "Downstream Research Joint Venture with Upstream Market Power," Southern Economic Journal, Southern Economic Association, vol. 80(3), pages 782-802, January.
  • Handle: RePEc:sej:ancoec:v:80:3:y:2014:p:782-802
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    File URL: http://dx.doi.org/10.4284/0038-4038-2012.110
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    References listed on IDEAS

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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.
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    Citations

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    Cited by:

    1. 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.
    2. Tran, Tat Thanh & Zikos, Vasileios, 2017. "R&D networks among suppliers and manufacturers," Economic Modelling, Elsevier, vol. 60(C), pages 151-161.
    3. repec:spr:jecfin:v:41:y:2017:i:2:d:10.1007_s12197-015-9346-2 is not listed on IDEAS
    4. Kesavayuth, Dusanee & Lee, Sang-Ho & Zikos, Vasileios, 2017. "Merger and Innovation Incentives in a Differentiated Industry," MPRA Paper 79821, University Library of Munich, Germany.
    5. Maria Alipranti & Chrysovalantou Miliou & Emmanuel Petrakis, 2014. "On Vertical Relations and Technology Adoption Timing," Working Papers 1502, University of Crete, Department of Economics.

    More about this item

    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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