Market Structure, Organizational Structure, and R&D Diversity

Joseph Farrell (), Richard Gilbert and Michael Katz ()

Competition Policy Center, Working Paper Series from Competition Policy Center, Institute for Business and Economic Research, UC Berkeley

Abstract: We examine the effects of market structure and the internal organization of firms on equilibrium R&D projects. We compare a monopolist’s choice of R&D portfolio to that of a welfare maximizer. We next show that Sah and Stiglitz’s finding that the market portfolio of R&D is independent of the number of firms under Bertrand competition extends to neither Cournot oligopoly nor a cartel. We also show that the ability of firms to pre-empt R&D by rivals along particular research paths can lead to socially excessive R&D diversification. Lastly, using Sah and Stiglitz’s definition of hierarchy, we establish conditions under which larger hierarchies invest in smaller portfolios.

Keywords: Internal organization; market power; research and development (search for similar items in EconPapers)
Date: 2002-09-09
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Market Structure, Organizational Structure, and R&D Diversity (2003)
Working Paper: Market Structure, Organizational Structure, and R&D Diversity (2002)
Working Paper: Market Structure, Organizational Structure, and R&D Diversity (2002)
Working Paper: Market Structure, Organizational Structure, and R&D Diversity (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:compol:qt8md3920f

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