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R&D-Competition Between Vertical Corporate Networks: Market Structure and Strategic R&D-Spillovers

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  • Wolfgang Becker
  • Jurgen Peters

Abstract

The strategic role of R&D-spillovers within vertical corporate networks (intra-group R&D-spillovers) is neglected in the innovation theory of Industrial Organization. In a two-industry model we formalize the effects of R&D-competition between two vertical corporate networks on supplier-market structures, technological opportunities and on the introduction time of new products. It can be shown that lower transaction costs of organizing vertical corporate networks increase the size of networks and reduce the concentration on supplier-markets. This raises the level of supplier's R&D-activities and lowers the time of development. Additionally, manufacturers have incentives to strategically generate R&D-spillovers within their networks. which improve the technological opportunities of suppliers and increase manufacturers probabilities to win the R&D-competition. This kind of R&D-spillovers can explain the often observed differences of firms' technological opportunities within a given supplier-market.

Suggested Citation

  • Wolfgang Becker & Jurgen Peters, 1998. "R&D-Competition Between Vertical Corporate Networks: Market Structure and Strategic R&D-Spillovers," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 6(1), pages 51-72.
  • Handle: RePEc:taf:ecinnt:v:6:y:1998:i:1:p:51-72
    DOI: 10.1080/10438599800000013
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. Gamal Atallah, 2003. "Information sharing and the stability of cooperation in research joint ventures," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(6), pages 531-554.
    3. Karbowski Adam, 2016. "The Elasticity-Based Approach to Enterprise Innovation," International Journal of Management and Economics, De Gruyter Open, vol. 49(1), pages 58-78, March.
    4. Karbowski, Adam & Prokop, Jacek, 2016. "Wybrane zagadnienia współpracy badawczo-rozwojowej przedsiębiorstw w ujęciu ekonomii gałęziowej
      [Selected problems of interfirm R&D cooperation in the industrial organization literature]
      ," MPRA Paper 72784, University Library of Munich, Germany.

    More about this item

    Keywords

    R&D-Competition; Strategic R&D-Spillovers; Vertical Corporate Networks; Market Structure; Technological Opportunities JEL Classification: D23; L13; O31;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • 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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