Downstream Research Joint Venture with Upstream Market Power

In a vertically related industry, we examine the downstream firms' incentives to invest in cost‐reducing Research and Development (R&D), and to form a Research Joint Venture (RJV), under two alternative structures of input supply: exclusive vertical relations and a single supplier. In contrast to the “hold‐up” argument, in which downstream firms invest non‐cooperatively and spillovers are low, R&D investments are higher under a single supplier than under competing vertical chains. Downstream firms' incentives to form a RJV are also stronger in the former case than they are in the latter. We identify conditions under which an RJV is beneficial for society. Integrated innovation and competition policies are also discussed.     

Information technology investment and firm performance in US retail trade

We examine the relationship between investments in information technology (IT) and retail firm performance. We use untapped firm and establishment micro data from the Censuses of Retail Trade and the Assets and Expenditures Survey. We show that large firms account for most retail IT investment, employment, and establishment growth. We find evidence of a significant relationship between IT investment intensity and productivity growth.     

Relationship Lending, Accounting Disclosure, and Credit Availability during the Asian Financial Crisis

We examine whether lending relationships benefit firms by making credit more available during periods of financial stress. Our main finding is that during the Asian financial crisis of July 1997 through the end of 1998, relationship lending increased the likelihood that Korean and Thai firms would obtain credit but it had no effect on Indonesian and Philippine firms. We ask if accounting disclosure might explain the observed differences among the three countries for which audit information is available. We find that for Indonesian firms with weak lending relationships, banks replace relationship lending technology with a financial-statement lending technology. Such a result does not hold for Korean and Philippine firms.