Profit-reducing fixed-price contract: The role of the transport sector

Takauchi, Kazuhiro (2016): Profit-reducing fixed-price contract: The role of the transport sector.

Abstract

We show that under a fixed-price contract where an upstream firm first sets the input price and downstream firms subsequently invest in R&D, all firms can become worse off when considering two-way trade with firm-specific carriers.

• Item Type: MPRA Paper
• Language: English
• Keywords: Fixed-price contract; Firm-specific carriers; R&D; Two-way trade
• Subjects: F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R40 - General

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