COOPERATIVE R&D WITH DIFFERENTIATED PRODUCTS IN VERTICALLY RELATED INDUSTRIES

Parisa Pourkarimi () and Gamal Atallah
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Parisa Pourkarimi: Department of Economics, Carleton University, Ottawa

Economic Review: Journal of Economics and Business, 2020, vol. 18, issue 2, 3-16

Abstract: This paper studies the impact of cooperative R&D on innovation, welfare, and profitability in vertically related industries with differentiated products. The model incorporates two vertically related industries, with horizontal spillovers within industries and vertical spillovers between them. Upstream firms produce a homogeneous intermediate good, while downstream firms provide differentiated products. Three types of R&D cooperation are studied: no cooperation, horizontal cooperation, and vertical cooperation. The comparison of cooperation settings in terms of R&D and profitability shows that although vertical cooperation yields higher innovation and welfare, it may lead to over–investment in R&D.

Keywords: vertical spillovers; horizontal spillovers; product differentiation; R&D cooperation (search for similar items in EconPapers)
JEL-codes: L13 O32 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Cooperative R&D with Differentiated Products in Vertically Related Industries (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:tuz:journl:v:18:y:2020:i:2:p:3-16

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