Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230475
Authors: 
Macho-Stadler, Inés
Matsushima, Noriaki
Shinohara, Ryusuke
Year of Publication: 
2019
Series/Report no.: 
ISER Discussion Paper No. 1069
Abstract: 
We analyze firms' decisions to adopt a vertical integrated or decentralized structure taking into account the characteristics of both the final good competition and the R&D process. We consider two vertical chains, where R&D is conducted by upstream sectors. R&D investment determines the production costs of the downstream sector and has spillovers on the rivals' costs. In a general setup, we show that equilibrium organizational structure depends on whether the situation considered belongs to one of four possible cases and we study how final good market competition, spillover, and incentives in innovation interact to determine the optimal vertical structure.
Subjects: 
R&D
Vertical separation
Market structure
Spillover
R&D
Vertical separation
Market structure
Spillover
JEL: 
L22
L13
O32
C72
Document Type: 
Working Paper

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