Organizational Structure and Technological Investment

Inés Macho‐Stadler, Noriaki Matsushima and Ryusuke Shinohara
Authors registered in the RePEc Author Service: Ines Macho-Stadler

Journal of Industrial Economics, 2021, vol. 69, issue 4, 785-816

Abstract: We analyze firms’ decisions on their vertical organization, taking into account the characteristics of both the final good competition and the R&D process. We consider two vertical chains where upstream sectors invest in R&D. Such investment determines the production costs of the downstream sector and has spillovers on the production and the investment costs of the rival. In a general setting, we show that the equilibrium organizational structure depends on whether the situation considered belongs to one of four possible cases. We study how final good market competition, R&D spillover, and R&D incentives interact to determine the equilibrium vertical structure.

Date: 2021
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Citations: View citations in EconPapers (5)

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https://doi.org/10.1111/joie.12277

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