Vertical structure and innovation: A study of the SoC and smartphone industries

• 成果类型: Article
• 署名作者: Yang, Chenyu
• 署名单位: University System of Maryland; University of Maryland College Park
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12339
• 发表日期: 2020
• 页码: 739-785
• 关键词: research-and-development; integration; CONTRACTS; inference; manufacturers; retailers; prices; COSTS

摘要

This article studies how vertical integration and upstream R&D subsidy affect innovation and welfare in vertically separated industries. I formulate a dynamic structural model of a dominant upstream firm and oligopolistic downstream firms that invest in complementary innovations. I estimate the model using data on the System-on-Chip (SoC) and smartphone industries. The results suggest that a vertical merger can increase innovation and welfare, mainly driven by the investment coordination of the merged firms. I also find that subsidizing the upstream innovation increases overall private investment, innovation, and welfare.