Working papers:
Tying and Innovation: A Dynamic Analysis of Tying Arrangements
Jay Pil Choi
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- Title:
- Tying and Innovation: A Dynamic Analysis of Tying Arrangements
- Author(s):
- Choi, Jay Pil
- Date:
- 1998
- Type:
- Working papers
- Department:
- Economics
- Permanent URL:
- http://hdl.handle.net/10022/AC:P:15731
- Series:
- Department of Economics Discussion Papers
- Part Number:
- 9798-15
- Publisher:
- Department of Economics, Columbia University
- Publisher Location:
- New York
- Abstract:
- This paper analyzes the effects of tying arrangements on R&D incentives. It shows that tying is a means through which a firm can commit to more aggressive R&D investment in the tied goods market. Tying also has the strategic effect of reducing rivals' incentives to invest in R&D. The strategy of tying is a profitable one if the gains, via an increased share of dynamic rents in the tied goods market, exceed the losses that result from intensified price competition in the market. The welfare implications of tying, and consequently the appropriate antitrust policy, are shown to depend on the nature of R&D competition.
- Subject(s):
- Economic theory
- Item views:
- 108