Vertical integration and innovation |
| |
| Affiliation: | 1. Department of Economics, Yokohama National University, 79-4 Tokiwadai, Hodogaya-ku, Yokohama 240-8501, Japan;2. Graduate School of Social Sciences, Tokyo Metropolitan University, Japan;1. Berglas School of Economics, Tel Aviv University, Israeln;2. Coller School of Management, Tel Aviv University, Israeln;1. University of North Carolina, Department of Economics, Chapel Hill, NC 27599-3305, United States;2. Toulouse School of Economics, 21 allée de Brienne, 31015 Toulouse, Cedex 6, France;3. European Commission, DG Competition, Place Madou 1, 1210 Saint-Josse-ten-Noode, Belgium |
| |
| Abstract: | Innovation is a driving force for most industries, where it moreover affects many stages of the vertical chain. We study the impact of vertical integration on innovation in an industry where firms need to undertake risky R&D investments at both production and distribution stages. Vertical integration brings better coordination within the integrated firm, which boosts its investment incentive at both upstream and downstream levels. However, it is only mutually beneficial for firms to integrate when both upstream and downstream innovations are important. When innovation is irrelevant at one level, firms favor instead vertical separation. The analysis provides insights for the wave of mergers and R&D outsourcing observed in the pharmaceutical industry and other vertically related industries. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
