Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
  EconPapers    
Economics at your fingertips  
 

VERTICAL R&D SPILLOVERS, COOPERATION, MARKET STRUCTURE, AND INNOVATION

Gamal Atallah

Industrial Organization from University Library of Munich, Germany

Abstract: This paper studies vertical R&D spillovers between upstream and downstream firms. The model incorporates two vertically related industries, with horizontal spillovers within each industry and vertical spillovers between the two industries. Four types of R&D cooperation are studied: no cooperation, horizontal cooperation, vertical cooperation, and simultaneous horizontal and vertical cooperation. Vertical spillovers always increase R&D and welfare, while horizontal spillovers may increase or decrease them. The comparison of cooperative settings in terms of R&D shows that no setting uniformly dominates the others. Which type of cooperation yields more R&D depends on horizontal and vertical spillovers, and market structure. The ranking of cooperative structures hinges on the signs and magnitudes of three competitive externalities (vertical, horizontal, and diagonal) which capture the effect of the R&D of a firm on the profits of other firms. One of the basic results of the strategic investment literature is that cooperation between competitors increases (decreases) R&D when horizontal spillovers are high (low); the model shows that this result does not necessarily hold when vertical spillovers and vertical cooperation are taken into account. The paper proposes a theory of innovation and market structure, showing that the relation between innovation and competition depends on horizontal spillovers, vertical spillovers, and cooperative settings. The private incentives for R&D cooperation are addressed. It is found that buyers and sellers have divergent interests regarding the choice of cooperative settings and that spillovers increase the likelihood of the emergence of cooperation in a decentralized equilibrium.

Keywords: Vertical R&D spillovers; Market structure; Innovation; Vertical R&D cooperation; R&D policy (search for similar items in EconPapers)
JEL-codes: L13 O32 (search for similar items in EconPapers)
Date: 2000-12-01
Note: Type of Document - PDF; prepared on IBM PC; to print on HP;
References: Add references at CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0004/0004009.pdf (application/pdf)

Related works:
Journal Article: Vertical R&D Spillovers, Cooperation, Market Structure, and Innovation (2002) Downloads
Working Paper: Vertical R&D Spillovers, Cooperation, Market Structure, and Innovation (2000) Downloads
Working Paper: Vertical R&D Sprillovers, Cooperation, Market Structure, and Innovation (2000) Downloads
Working Paper: Vertical R&D Sprillovers, Cooperation, Market Structure, and Innovation (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpio:0004009

Access Statistics for this paper

More papers in Industrial Organization from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().

 
Page updated 2024-12-29
Handle: RePEc:wpa:wuwpio:0004009