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Article
Vertical research joint ventures
International Journal of Industrial Organization
  • Samiran BANERJEE, Georgia Institute of Technology, United States
  • Ping LIN, Lingnan University, Hong Kong
Document Type
Journal article
Publication Date
1-1-2001
Disciplines
Abstract

We examine the incentives of firms to form vertical research joint ventures (RJVs) which enable an upstream supplier to internalize the positive externality of its innovation on a downstream market, while giving the downstream members a cost advantage over their non-member rivals. Under the cost-sharing rules considered, the upstream member desires a larger RJV compared to the downstream members. R&D subsidies may be detrimental to social welfare. The optimal RJV size for the upstream (downstream) member decreases (increases) with R&D cost and increases (decreases) with the gains from innovation and the size of market. An increase in upstream competition has the effect of enlarging the optimal RJV.

DOI
10.1016/S0167-7187(99)00046-6
Scopus EID
https://www.scopus.com/inward/record.uri?eid=2-s2.0-0035545549&doi=10.1016%2fS0167-7187%2899%2900046-6&partnerID=40&md5=438b085189476bddc6b0a29b864be27a
Publisher Statement

Copyright © 2001 Elsevier Science B.V.

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Citation Information
Banerjee, S., & Lin, P. (2001). Vertical research joint ventures. International Journal of Industrial Organization, 19(1-2), 285-302. doi: 10.1016/S0167-7187(99)00046-6