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Downstream Research Joint Venture with Upstream Market Power

Author

Listed:
  • Constantine Manasakis

    (Department of Economics, University of Crete, Greece)

  • Emmanuel Petrakis

    (Department of Economics, University of Crete, Greece)

Abstract
In this paper, we examine how the structure of an imperfectly competitive input market affects final-good producers’ incentives to form a Research Joint Venture (RJV), in a differentiated duopoly where R&D investments exhibit spillovers. Although a RJV is always profitable, downstream firms’ incentives for R&D cooperation are non-monotone in the structure of the input market, with incentives being stronger under a monopolistic input supplier, whenever spillovers are low. In contrast to the hold-up argument, we also find that under non-cooperative R&D investments and weak free-riding, final-good producers invest more when facing a monopolistic input supplier, compared with investments under competing vertical chains. Integrated innovation and competition policies are also discussed.

Suggested Citation

  • Constantine Manasakis & Emmanuel Petrakis, 2005. "Downstream Research Joint Venture with Upstream Market Power," Working Papers 0513, University of Crete, Department of Economics.
    • Handle: RePEc:crt:wpaper:0513
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    References listed on IDEAS

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    Cited by:

    1. Maria Alipranti & Emmanuel Petrakis, 2022. "Upstream market structure and the timing of technology adoption," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1298-1310, July.

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    More about this item

    Keywords

    Oligopoly; Process Innovations; Research Joint Ventures;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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