Coordinating R&D efforts for quality improvement along a supply chain

Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: The optimal design of two-part tariffs is investigated in a dynamic model where two firms belonging to the same supply chain invest in R&D activities to increase the quality of the final product. It is shown that the replication of the vertically integrated monopolist s performance can be attained using a TPT in which the fee is a linear function of either the upstream R&D effort or product quality itself. The possibility of relying on R&D figures appearing in the upstream firm s balance sheet is desirable as quality enhancement might not be observable or verifiable.

JEL-codes: C73 L12 O31 (search for similar items in EconPapers)
Date: 2016-02
New Economics Papers: this item is included in nep-bec, nep-com, nep-ino and nep-mic
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