Autore
Milliou, Chrysovalantou

Titolo
Vertical integration and R&D spillovers: is there a need for 'firewalls'?
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 2001 - Fascicolo: 17 - Pagina iniziale: 1 - Pagina finale: 23

We investigate the impact of R&D spillovers on innovation incentives and welfare. In particular, we consider the case in which the spillovers are due to the information flow from a downstream nonintegrated firm to the downstream division of a vertically integrated firm via its upstream subsidiary. Using a simple model , in which both the integrated and nonintegrated firm engage in cost-reducing R&D and compete in quantities, we show that the impact of the R&D spillovers on innovation, output, and profits, is positive for the integrated firm, and negative for the nonintegrated firm. In the case of differentiated goods, our findings on welfare provide insights against the implementation of a 'firewall'.




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