R&D and Output in a Regulated Vertically Integrated Oligopoly

Bulletin of Economic Research, vol. 51, no. 4, pp. 339-47

Posted: 6 Apr 2016

See all articles by Rajeev K. Goel

Rajeev K. Goel

Illinois State University - Department of Economics

Date Written: 1999

Abstract

This paper examines input price regulation's effects on research and development (R&D) and output in a vertically integrated industry. A single integrated firm produces the crucial input and the output. The non-integrated rival does not produce the input but buys it from the integrated firm at a regulated price. Only the integrated firm engages in cost-reducing R&D. Results show that changes in input price have a negative effect on the integrated firm's output and R&D. The non-integrated firm's output response to changes in input price depends upon the slope of the demand curve. The welfare analysis examines the social desirability of such regulation.

Suggested Citation

Goel, Rajeev K., R&D and Output in a Regulated Vertically Integrated Oligopoly (1999). Bulletin of Economic Research, vol. 51, no. 4, pp. 339-47. Available at SSRN: https://ssrn.com/abstract=2758917

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

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