Organizational structure and technological investment

Ines Macho-Stadler, Noriaki Matsushima and Ryusuke Shinohara

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

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: 2019-11, Revised 2020-12
New Economics Papers: this item is included in nep-com and nep-mic
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https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2019/DP1069RR.pdf

Related works:
Journal Article: Organizational Structure and Technological Investment (2021)
Working Paper: Organizational Structure and Technological Investment (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:1069rr

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