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Horizontal and Vertical R&D Cooperation

This paper introduces a second, vertically related industry into the usual one-industry oligopoly framework of cooperative R&D investment between firms operating on the same product market. R&D efforts are affected by intra- and inter-industry R&D spillovers. Horizontal and vertical R&D cooperation scenarios are compared to R&D competition. It turns out that vertical R&D cooperation is usually the only stable equilibrium in the sense that no firm has an incentive to chose any other R&D scenario. Empirical implications concerning the relationship between R&D intensities and R&D spillovers are derived and empirical evi-dence is given using data of German manufacturing firms.

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Paper provided by Center of Finance and Econometrics, University of Konstanz in its series CoFE Discussion Paper with number 00-02.

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Length: 28 pages
Date of creation: Jan 2000
Date of revision:
Handle: RePEc:knz:cofedp:0002
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  1. Zvi Griliches, 1991. "The Search for R&D Spillovers," NBER Working Papers 3768, National Bureau of Economic Research, Inc.
  2. d'ASPREMONT, Claude & JACQUEMIN, Alexis, . "Cooperative and noncooperative R&D in duopoly with spillovers," CORE Discussion Papers RP 823, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  4. Bidault, Francis & Despres, Charles & Butler, Christina, 1998. "The drivers of cooperation between buyers and suppliers for product innovation," Research Policy, Elsevier, vol. 26(7-8), pages 719-732, April.
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  7. Greenhut, M L & Ohta, H, 1979. "Vertical Integration of Successive Oligopolists," American Economic Review, American Economic Association, vol. 69(1), pages 137-41, March.
  8. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  9. Jacquemin, Alexis, 1988. "Cooperative agreements in R&D and European antitrust policy," European Economic Review, Elsevier, vol. 32(2-3), pages 551-560, March.
  10. Licht, Georg & Harhoff, Dietmar, 1993. "Das Mannheimer Innovationspanel," ZEW Discussion Papers 93-21, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Margaret E. Slade, 1995. "Empirical Games: The Oligopoly Case," Canadian Journal of Economics, Canadian Economics Association, vol. 28(2), pages 368-402, May.
  12. Newey, Whitney K., 1984. "A method of moments interpretation of sequential estimators," Economics Letters, Elsevier, vol. 14(2-3), pages 201-206.
  13. Zvi Griliches, 1998. "Interindustry Technology Flows and Productivity Growth: A Reexamination," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 241-250 National Bureau of Economic Research, Inc.
  14. Steurs, Geert, 1995. "Inter-industry R&D spillovers: What difference do they make?," International Journal of Industrial Organization, Elsevier, vol. 13(2), pages 249-276.
  15. Salant, S.W. & Shaffer, G., 1997. "Optimal Asymmetric Strategies in Research Joint Ventures," Papers 97-06, Michigan - Center for Research on Economic & Social Theory.
  16. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-21, January.
  17. VanderWerf, Pieter A., 1992. "Explaining downstream innovation by commodity suppliers with expected innovation benefit," Research Policy, Elsevier, vol. 21(4), pages 315-333, August.
  18. Harabi, Najib, 1997. "Vertical Relations Between Firms and Innovation: An Empirical Investigation of German Firms," ZEW Discussion Papers 97-10, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  19. De Bondt, Raymond & Veugelers, Reinhilde, 1991. "Strategic investment with spillovers," European Journal of Political Economy, Elsevier, vol. 7(3), pages 345-366, October.
  20. d'Aspremont, Claude & Jacquemin, Alexis, 1990. "Cooperative and Noncooperative R&D in Duopoly with Spillovers: Erratum," American Economic Review, American Economic Association, vol. 80(3), pages 641-42, June.
  21. Newey, Whitney K. & McFadden, Daniel, 1986. "Large sample estimation and hypothesis testing," Handbook of Econometrics, in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 36, pages 2111-2245 Elsevier.
  22. Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, vol. 82(5), pages 1307-20, December.
  23. Henriques, Irene, 1990. "Cooperative and Noncooperative R&D in Duopoly with Spillovers: Comment," American Economic Review, American Economic Association, vol. 80(3), pages 638-40, June.
  24. Jeremy I. Bulow & John Geanakoplos & Paul D. Klemperer, 1983. "Multimarket Oligopoly," Cowles Foundation Discussion Papers 674, Cowles Foundation for Research in Economics, Yale University.
  25. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
  26. Waterson, Michael, 1982. "Vertical Integration, Variable Proportions and Oligopoly," Economic Journal, Royal Economic Society, vol. 92(365), pages 129-44, March.
  27. Newey, Whitney K., 1999. "Consistency of two-step sample selection estimators despite misspecification of distribution," Economics Letters, Elsevier, vol. 63(2), pages 129-132, May.
  28. Kaiser, Ulrich & Licht, Georg, 1998. "R&D cooperation and R&D intensity: theory and micro-econometric evidence for german manufacturing industries," ZEW Discussion Papers 98-32, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  29. Ziss, Steffen, 1994. "Strategic R&D with Spillovers, Collusion and Welfare," Journal of Industrial Economics, Wiley Blackwell, vol. 42(4), pages 375-93, December.
  30. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
  31. Vonortas, Nicholas S., 1994. "Inter-firm cooperation with imperfectly appropriable research," International Journal of Industrial Organization, Elsevier, vol. 12(3), pages 413-435, September.
  32. Olsen, Randall J, 1980. "A Least Squares Correction for Selectivity Bias," Econometrica, Econometric Society, vol. 48(7), pages 1815-20, November.
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