@techreport{Harhoff1991incentives,
abstract = {This paper develops a two-industry model of R&D. A monopolist supplier sells an intermediate good to an oligopolistic buyer industry where firms compete in quantity and quality-enhancing R&D. The supplier can contribute to downstream product improvements by creating spillover knowledge which downstream firms use as a substitute for their own R&D efforts. Even if a market for R&D information fails to exist, the supplier may appropriate an indirect return on R&D for two reasons. Sufficiently high levels of spillover information lead to greater downstream product quality, and spillover information reduces the sunk cost of R&D necessary to enter the downstream industry. Both effects cause an expansion of downstream output and enhance the demand for the supplier's intermediate good. Given sufficiently strong incentives for supplier R&D, the locus of R&D shifts partially from the downstream to the upstream industry. R&D intensities, technological opportunities, and the industry structure of the downstream industry are determined endogenously. The R&D behavior of supplier and buyer firms is characterized by switching equilibria, thereby providing support for the notion of distinct technological regimes.},
address = {Mannheim},
author = {Dietmar Harhoff},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {O31; 330; Industrielle Forschung; \"{O}konomischer Anreiz; Theorie},
language = {eng},
number = {91-06},
publisher = {Zentrum f\"{u}r Europ\"{a}ische Wirtschaftsforschung (ZEW)},
title = {R&D incentives and spillovers in a two-industry model},
type = {ZEW Discussion Papers},
url = {http://hdl.handle.net/10419/29367},
year = {1991}
}
