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Centralized Versus Decentralized R&D Within a Multiproduct Monopolistic Firm Under Research Spillovers

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  • Doori Kim
  • Sang‐Ho Lee
  • Vasileios Zikos

Abstract

This study investigates the R&D organizational structure of a multi‐product monopolistic firm where the central office decides between centralized and decentralized R&D under research spillovers. We demonstrate that decentralized R&D becomes advantageous when the difference between monitoring and coordination costs is relatively high while products are sufficiently differentiated with lower spillovers. We also find that decentralized R&D can yield higher social welfare under moderate spillovers and product differentiation conditions. Our findings underscore the governmental need for a nuanced approach in designing R&D structures, considering the trade‐offs between centralized and decentralized R&D to align producer and consumer incentives.

Suggested Citation

  • Doori Kim & Sang‐Ho Lee & Vasileios Zikos, 2025. "Centralized Versus Decentralized R&D Within a Multiproduct Monopolistic Firm Under Research Spillovers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(2), pages 795-809, March.
    • Handle: RePEc:wly:mgtdec:v:46:y:2025:i:2:p:795-809
    DOI: 10.1002/mde.4404
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    References listed on IDEAS

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