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Profit-reducing fixed-price contract: The role of the transport sector

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  • Takauchi, Kazuhiro

Abstract

We show that under a fixed-price contract where an upstream firm first sets the input price and downstream firms subsequently invest in R&D, all firms can become worse off when considering two-way trade with firm-specific carriers.

Suggested Citation

  • Takauchi, Kazuhiro, 2016. "Profit-reducing fixed-price contract: The role of the transport sector," MPRA Paper 71413, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:71413
    as

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    File URL: https://mpra.ub.uni-muenchen.de/71413/1/MPRA_paper_71413.pdf
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    References listed on IDEAS

    as
    1. Haaland, Jan I. & Kind, Hans Jarle, 2008. "R&D policies, trade and process innovation," Journal of International Economics, Elsevier, vol. 74(1), pages 170-187, January.
    2. Vasileios Zikos & Dusanee Kesavayuth, 2010. "Downstream R&D, raising rival's costs, and input-price contracts: a comment on the role of spillovers," Economics Bulletin, AccessEcon, vol. 30(4), pages 3018-3025.
    3. Long, Ngo Van & Raff, Horst & Stähler, Frank, 2011. "Innovation and trade with heterogeneous firms," Journal of International Economics, Elsevier, vol. 84(2), pages 149-159, July.
    4. Takauchi, Kazuhiro, 2015. "Endogenous transport price and international R&D rivalry," Economic Modelling, Elsevier, vol. 46(C), pages 36-43.
    5. Arghya Ghosh & Jonathan Lim, 2013. "Cooperative and non-cooperative R&D and trade costs," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(6), pages 942-958, September.
    6. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2004. "Entry and Productivity Growth: Evidence from Microlevel Panel Data," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 265-276, 04/05.
    7. Matsushima, Noriaki & Takauchi, Kazuhiro, 2014. "Port privatization in an international oligopoly," Transportation Research Part B: Methodological, Elsevier, vol. 67(C), pages 382-397.
    8. Kenzo Abe & Keisuke Hattori & Yoshitaka Kawagoshi, 2014. "Trade Liberalization and Environmental Regulation on International Transportation," The Japanese Economic Review, Japanese Economic Association, vol. 65(4), pages 468-482, December.
    9. ISHIKAWA, Jota & TARUI, Nori, 2015. "Backfiring with backhaul problems: Trade and Industrial Policies with Endogenous Transport Costs," Discussion paper series HIAS-E-12, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    10. Dusanee Kesavayuth & Vasileios Zikos, 2009. "Endogenous Contracts in Unionized Oligopoly," LABOUR, CEIS, vol. 23(2), pages 209-235, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Fixed-price contract; Firm-specific carriers; R&D; Two-way trade;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • 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
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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