Title: ORGANIZATIONAL STRUCTURE AND TECHNOLOGICAL INVESTMENT
Abstract: We analyze firms' decisions to adopt a vertical integration or separation, taking into account the characteristics of both the final good competition and the R&D process. We consider two vertical chains, where upstream sectors conduct R&D investment. Such investment determines the production costs of the downstream sector and has knowledge and R&D spillovers on the rivals' costs. In a general setting, we show that the equilibrium organizational structure depends on whether the situation considered belongs to one of four possible cases. We study how final good market competition, spillover, and incentives in innovation interact to determine the equilibrium vertical structure.
Publication Year: 2020
Publication Date: 2020-12-01
Language: en
Type: preprint
Access and Citation
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot