This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Vertical R&D Spillovers, Cooperation, Market Structure, And Innovation

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Gamal Atallah (Université de Montréal, C.R.D.E. and CIRANO)

Additional information is available for the following registered author(s):

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.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://129.3.20.41/eps/io/papers/0004/0004009.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by EconWPA in its series Industrial Organization with number 0004009.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: 01 Dec 2000
Date of revision:
Handle: RePEc:wpa:wuwpio:0004009

Note: Type of Document - PDF; prepared on IBM PC; to print on HP;
Contact details of provider:
Web page: http://129.3.20.41

For technical questions regarding this item, or to correct its listing, contact: (EconWPA).

Related research
Keywords: Vertical R&D spillovers; Market structure; Innovation; Vertical R&D cooperation; R&D policy;

Other versions of this item:

Find related papers by JEL classification:
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Poyago-Theotoky, Joanna, 1995. "Equilibrium and Optimal Size of a Research Joint Venture in an Oligopoly with Spillovers," Journal of Industrial Economics, Blackwell Publishing, vol. 43(2), pages 209-26, June. [Downloadable!] (restricted)
  2. d'Aspremont, Claude & Jacquemin, Alexis, 1988. "Cooperative and Noncooperative R&D in Duopoly with Spillovers," American Economic Review, American Economic Association, vol. 78(5), pages 1133-37, December. [Downloadable!] (restricted)
  3. Mansfield, Edwin, 1985. "How Rapidly Does New Industrial Technology Leak Out?," Journal of Industrial Economics, Blackwell Publishing, vol. 34(2), pages 217-23, December. [Downloadable!] (restricted)
  4. Richard J. Rosen, 1991. "Research and Development with Asymmetric Firm Sizes," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 411-429, Autumn. [Downloadable!] (restricted)
  5. Chaoe, C., 1998. "Two Comments on the Industrial Organisation of Vertically Related Markets," Papers 90-03, La Trobe - Department of Economics.
  6. J. Poyago-Theotoky,, . "R&D Competition with Asymmetric Firms," Discussion Papers 96/13, University of Nottingham, School of Economics.
    Other versions:
  7. Bruno Cassiman & Reinhilde Veugelers, 1998. "R&D Cooperation and Spillovers: Some Empirical Evidence," Economics Working Papers 328, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
  8. Irmen, Andreas, 1997. "Mark-up pricing and bilateral monopoly," Economics Letters, Elsevier, vol. 54(2), pages 179-184, February. [Downloadable!] (restricted)
    Other versions:
  9. Jaffe, Adam B, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits, and Market Value," American Economic Review, American Economic Association, vol. 76(5), pages 984-1001, December. [Downloadable!] (restricted)
    Other versions:
  10. Aghion, P. & Tirole, J., 1993. "On the Management of Innovation," Working papers 93-12, Massachusetts Institute of Technology (MIT), Department of Economics.
    Other versions:
  11. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December. [Downloadable!] (restricted)
  12. Kim B. Clark & W. Bruce Chew & Takahiro Fujimoto, 1987. "Product Development in the World Auto Industry," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1987-3), pages 729-782. [Downloadable!]
  13. Greenhut, M L & Ohta, H, 1979. "Vertical Integration of Successive Oligopolists," American Economic Review, American Economic Association, vol. 69(1), pages 137-41, March.
  14. Eaton, C. & Eswaran, M., 1994. "Technology-Trading Coalitions in Supergames," UBC Departmental Archives 94-23, UBC Department of Economics.
    Other versions:
  15. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1987-3), pages 783-832. [Downloadable!]
  16. Hagedoorn, John & Link, Albert N. & Vonortas, Nicholas S., 2000. "Research partnerships1," Research Policy, Elsevier, vol. 29(4-5), pages 567-586, April. [Downloadable!] (restricted)
  17. VanderWerf, Pieter A., 1992. "Explaining downstream innovation by commodity suppliers with expected innovation benefit," Research Policy, Elsevier, vol. 21(4), pages 315-333, August. [Downloadable!] (restricted)
  18. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc. [Downloadable!]
  19. Wolff, Edward N. & Ishaq Nadiri, M., 1993. "Spillover effects, linkage structure, and research and development," Structural Change and Economic Dynamics, Elsevier, vol. 4(2), pages 315-331, December. [Downloadable!] (restricted)
  20. Jeffrey I. Bernstein, 1988. "Costs of Production, Intra- and Interindustry R&D Spillovers: Canadian Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 21(2), pages 324-47, May. [Downloadable!] (restricted)
  21. Sang-Seung Yi, 1998. "Endogenous Formation of Joint Ventures with Efficiency Gains," RAND Journal of Economics, The RAND Corporation, vol. 29(3), pages 610-631, Autumn. [Downloadable!] (restricted)
  22. Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, vol. 82(5), pages 1307-20, December. [Downloadable!] (restricted)
  23. Aghion, Philippe & Tirole, Jean, 1994. "The Management of Innovation," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 1185-1209, November. [Downloadable!] (restricted)
  24. Delbono, Flavio & Denicolo, Vincenzo, 1990. "R & D investment in a symmetric and homogeneous oligopol : Bertrand vs Cournot," International Journal of Industrial Organization, Elsevier, vol. 8(2), pages 297-313, June. [Downloadable!] (restricted)
  25. Dasgupta, Partha & Stiglitz, Joseph, 1980. "Industrial Structure and the Nature of Innovative Activity," Economic Journal, Royal Economic Society, vol. 90(358), pages 266-93, June. [Downloadable!] (restricted)
  26. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation, Yale University. [Downloadable!]
  27. Ruff, Larry E., 1969. "Research and technological progress in a cournot economy," Journal of Economic Theory, Elsevier, vol. 1(4), pages 397-415, December. [Downloadable!] (restricted)
  28. Kamien, Morton I & Zang, Israel, 1993. "Competing Research Joint Ventures," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 2(1), pages 23-40, Spring.
  29. Kotaro Suzumura, 1990. "Cooperative and Non-cooperative R&D in Oligopoly with Spillovers," Discussion Paper Series a218, Institute of Economic Research, Hitotsubashi University.
  30. Jorde, Thomas M & Teece, David J, 1990. "Innovation and Cooperation: Implications for Competition and Antitrust," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 75-96, Summer. [Downloadable!] (restricted)
  31. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  32. W. Salant, Stephen & Shaffer, Greg, 1998. "Optimal asymmetric strategies in research joint ventures," International Journal of Industrial Organization, Elsevier, vol. 16(2), pages 195-208, March. [Downloadable!] (restricted)
    Other versions:
  33. Baumol, William J., 1997. "Pareto Optimal Sizes of Innovation Spillovers," Working Papers 97-42, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  34. Kesteloot, Katrien & Veugelers, Reinhilde, 1995. "Stable R&D Cooperation with Spillovers," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 4(4), pages 651-72, Winter.
  35. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-21, January. [Downloadable!] (restricted)
  36. Ron Jarmin, 1993. "Asymmetric Learning Spillovers," Working Papers 93-7, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  37. Richard C. Levin & Peter C. Reiss, 1988. "Cost-Reducing and Demand-Creating R&D with Spillovers," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 538-556, Winter. [Downloadable!] (restricted)
  38. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December. [Downloadable!] (restricted)
  39. Leahy, Dermot & Neary, J Peter, 1997. "Public Policy towards R&D in Oligopolistic Industries," American Economic Review, American Economic Association, vol. 87(4), pages 642-62, September. [Downloadable!] (restricted)
    Other versions:
  40. Ward, Michael R & Dranove, David, 1995. "The Vertical Chain of Research and Development in the Pharmaceutical Industry," Economic Inquiry, Oxford University Press, vol. 33(1), pages 70-87, January.
  41. Young, Allan Richard, 1991. "Vertical Structure and Nash Equilibrium: A Note," Journal of Industrial Economics, Blackwell Publishing, vol. 39(6), pages 717-22, December. [Downloadable!] (restricted)
  42. Nadiri, M.I., 1993. "Innovations and Technological Spillovers," Working Papers 93-31, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  43. Bester, Helmut & Petrakis, Emmanuel, 1993. "The incentives for cost reduction in a differentiated industry," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 519-534. [Downloadable!] (restricted)
    Other versions:
  44. Jeffrey I. Bernstein & M. Ishaq Nadiri, 1988. "Interindustry R&D Spillovers, Rates Of Return, and Production In High-Tech Industries," NBER Working Papers 2554, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  45. Geroski, P A, 1992. "Vertical Relations between Firms and Industrial Policy," Economic Journal, Royal Economic Society, vol. 102(410), pages 138-47, January. [Downloadable!] (restricted)
  46. Steurs, Geert, 1995. "Inter-industry R&D spillovers: What difference do they make?," International Journal of Industrial Organization, Elsevier, vol. 13(2), pages 249-276. [Downloadable!] (restricted)
  47. Goto, Akira & Suzuki, Kazuyuki, 1989. "R&D Capital, Rate of Return on R&D Investment and Spillover of R&D in Japanese Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 555-64, November. [Downloadable!] (restricted)
  48. Fudenberg, Drew & Tirole, Jean, 1984. "The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and Hungry Look," American Economic Review, American Economic Association, vol. 74(2), pages 361-66, May. [Downloadable!] (restricted)
  49. Teece, David J., 1992. "Competition, cooperation, and innovation : Organizational arrangements for regimes of rapid technological progress," Journal of Economic Behavior & Organization, Elsevier, vol. 18(1), pages 1-25, June. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Uwe Cantner & Andreas Meder, 2006. "Die Wirkung von Forschungskooperationen auf den Unternehmenserfolg - eine Fallstudie zum Landkreis Saalfeld Rudolstadt," Jenaer Schriften zur Wirtschaftswissenschaft 24/2006, Friedrich-Schiller-Universit�t Jena, Wirtschaftswissenschaftliche Fakult�t. [Downloadable!]
  2. Belderbos,René & Carree,Martin & Lokshin,Boris, 2004. "Cooperative R&D and Firm Performance," Research Memoranda 022, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
    Other versions:
  3. Constantine Manasakis & Emmanuel Petrakis, 2005. "Downstream Research Joint Venture with Upstream Market Power," Working Papers 0513, University of Crete, Department of Economics. [Downloadable!]
  4. Belderbos, René & Carree, Martin & Lokshin, Boris, 2006. "Complementarity in R&D cooperation strategies," Research Memoranda 013, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
    Other versions:
  5. Werner Bönte & Lars Wiethaus, 2005. "Knowledge Transfer in Buyer-Supplier Relationships – When It (Not) Occurs," RWI Discussion Papers 0034, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. [Downloadable!]
Statistics
Access and download statistics

Did you know? The most prolific authors have over 700 items listed on IDEAS.

This page was last updated on 2009-10-17.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.