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Cooperative R&D with Differentiated Products in Vertically Related Industries

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

Working Papers from University of Ottawa, Department of Economics

Abstract: This paper studies the impact of cooperative R&D on innovation, welfare, and profitability in vertically related industries where products are differentiated. The model incorporates two vertically related industries, with horizontal spillovers within each industry and vertical spillovers between the two industries. 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 of profitability shows that although vertical cooperation yields higher innovation and welfare, it may lead firms to over–invest in R&D.

Keywords: Vertical spillovers; Horizontal spillovers; Product differentiation; R&D Cooperation. (search for similar items in EconPapers)
Pages: 26 pages
Date: 2020
New Economics Papers: this item is included in nep-com, nep-cse, nep-ino and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:ott:wpaper:2007e

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