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Appears in Collections:Accounting and Finance Working Papers
Title: The Design of Vertical R&D Collaborations
Authors: Herbst, Patrick
Walz, Uwe
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Citation: Herbst P & Walz U (2011) The Design of Vertical R&D Collaborations. SSRN Working Paper Series. Social Science Research Network.
Keywords: Managing innovations
vertical R&D
R&D collaboration
JEL Code(s): L22
Issue Date: 18-Apr-2011
Publisher: Social Science Research Network
Series/Report no.: SSRN Working Paper Series
Abstract: Suppliers play a major role in the downstream firm's innovation processes. We analyse ownership allocations and the choice of R&D technology in vertical R&D cooperations. Given incomplete contracts on the R&D outcome, there is a trade-off between R&D specifically designed towards a manufacturer (increasing investment productivity) and a general technology (hold-up reduction). We find that the market solution yields the specific technology in too few cases. More intense product market competition shifts optimal ownership towards the supplier. The use of exit clauses increases the gains from the collaboration.
Type: Working or Discussion Paper
Rights: Author retains copyright.
Affiliation: Accounting and Finance
Goethe University Frankfurt

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