The design of vertical R&D collaborations

Patrick Herbst and Uwe Walz ()

No 2009/06, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: Suppliers play a major role in innovation processes. We analyze ownership allocations and the choice of R&D technology in vertical R&D cooperations. Given incomplete contracts on the R&D outcome, there is a tradeoff between R&D specifically designed towards a manufacturer (increasing investment productivity) and a general technology (hold-up reduction). We find that the market solution yields the specific technology in too few cases. More intense product market competition shifts optimal ownership towards the supplier. The use of exit clauses increases the gains from the collaboration.

Keywords: Managing Innovations; Vertical R&D; R&D Collaboration; Rent-Seeking (search for similar items in EconPapers)
JEL-codes: L22 L24 O31 O32 (search for similar items in EconPapers)
Date: 2009
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Related works:
Journal Article: The Design of Vertical R&D Collaborations (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:200906

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