Disclosure of R&D Knowledge With Partial Cross‐Ownership in a Vertically Mixed Market

Ting Zhang, Zhaoxin Qi and Dongdong Li

Manchester School, 2025, vol. 93, issue 6, 505-519

Abstract: In this paper, we investigate the impact of partial vertical cross‐ownership on optimal R&D knowledge disclosure in a vertically mixed market with an upstream firm supplying competing downstream public and private firms. The results show that under vertical separation and forward cross‐ownership, the downstream public firm fully discloses its R&D knowledge, whereas the downstream private firm does not disclose its R&D knowledge. Under backward cross‐ownership, both downstream public and private firms fully disclose their information. Furthermore, we find that the upstream firm and the downstream private firm favor backward cross‐ownership. Finally, we find that privatization policies lead to higher social welfare, but their impact on R&D knowledge disclosure varies among different downstream firms.

Date: 2025
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