Vertical integration, knowledge disclosure and decreasing rival's cost
Emmanuel Petrakis () and
Chrysovalantou Milliou ()
UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía
We study vertical integration incorporating the fact that it creates the possibility of knowledge disclosure. We consider a setting where, through integrating, an upstream monopolist learns its downstream partner’s innovation, and can disclose it to its downstream rival. We show that a vertically integrated firm chooses to fully disclose its knowledge to its downstream rival. Knowledge disclosure intensifies downstream competition but, at the same time, expands the downstream market size. We also show that, due to knowledge disclosure, vertical integration increases firms’ innovation incentives, consumer and total welfare, and decreases, instead of raises, the rival’s cost.
Keywords: Vertical; integration; R&D; investments; Market; floreclosure; Knowledge; disclosure (search for similar items in EconPapers)
JEL-codes: L13 L22 L42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-ino, nep-knm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:we1213
Access Statistics for this paper
More papers in UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía
Bibliographic data for series maintained by Ana Poveda ().