Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73142
Authors: 
Memar, Ahmad Reza Saboori
Götz, Georg
Year of Publication: 
2013
Series/Report no.: 
Joint Discussion Paper Series in Economics 07-2013
Abstract: 
This paper focuses on incentives to invest in research and development (R&D) in vertically related markets. In a bilateral duopoly setup, we consider how process R&D incentives of the firms in both upstream and downstream market depend on the intensity of simultaneous interbrand and intrabrand competition. Among the results: both interbrand and intrabrand competition have twofold effects on R&D incentives. Existence of a vertically related market with imperfect competition lowers both the incentives to invest in process R&D and the competitive advantage through the R&D investment. We will show how the impact of a firm's R&D investments in either market on consumer surplus as well as on the profits of all firms in both markets depends on exogenous parameters.
Subjects: 
research and development
vertical relations
bilateral oligopoly
product differentiation
process innovation
interbrand and intrabrand competition
JEL: 
L13
D43
O30
Document Type: 
Working Paper

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