Downstream R&D, raising rival's costs, and input-price contracts: a comment on the role of spillovers
Vasileios Zikos () and
Dusanee Kesavayuth ()
Economics Bulletin, 2010, vol. 30, issue 4, 3018-3025
We reconsider Banerjee and Lin [International Journal of Industrial Organization, 2003] by investigating the role of spillovers (or informational flows) for the profitability of input-price contracts in a vertically related industry. We show that spillovers influence the relative magnitude of the main forces operating in the model, which can either reinforce or alter some of the predictions.
Keywords: Input-price contracts; Input supplier; R&D; Spillovers (search for similar items in EconPapers)
JEL-codes: L0 L1 (search for similar items in EconPapers)
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