Contract Enforcement and R&D Investment

Martin Watzinger and Michael Seitz

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: In this article we study the relation between the quality of contract enforcement and R&D investment across countries and industries. If companies invest successfully in R&D they are open for exploitation by their supplier if supply contracts are not enforceable. This hold-up problem can reduce the incentive to invest in R&D exante. In line with this theoretical idea we find in the empirical analysis that R&D investment increases with the quality of the judicial system. This effect is particularly strong in industries which rely more on contracts to acquire input and in which it is harder to vertically integrate.

JEL-codes: O30 O43 P48 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-ino and nep-tid
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Contract enforcement and R&D investment (2017)
Working Paper: Contract enforcement and R&D investment (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79773

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