search query: @author Banerjee, S. / total: 7
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| Author: | Banerjee, S. Lin, P. |
| Title: | Downstream R&D, raising rivals' costs, and input price contracts |
| Journal: | International Journal of Industrial Organization
2003 : JAN, VOL. 21:1, p. 79-96 |
| Index terms: | R&D R&D costs Competition |
| Language: | eng |
| Abstract: | The authors analyze the incentives for cost-reducing R&D by downstream firms in a two-tier market structure. By increasing the demand for an input, downstream R&D allows the upstream firm to raise its input price. This lowers the benefit of R&D to a downstream firm but raises its rivals' costs. As a result, a downstream oligopolist may invest more in R&D setting. Fixed-price agreements promote innovation by eliminating the opportunistic behaviour of the input supplier and are welfare enhancing. |
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