Abstract
This paper analyses the effects of tying arrangements on R and D incentives. It shows that tying is a means through which a firm can commit to more aggressive R and D investment in the tied goods market. Tying also has the strategic effect of reducing rivals' incentives to invest in R and 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 discussed.
| Original language | English |
|---|---|
| Pages (from-to) | 83-101 |
| Number of pages | 19 |
| Journal | Economic Journal |
| Volume | 114 |
| Issue number | 492 |
| DOIs | |
| Publication status | Published - 2004 Jan 1 |
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All Science Journal Classification (ASJC) codes
- Economics and Econometrics
Cite this
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Tying and innovation : A dynamic analysis of tying arrangements. / Choi, Jay Pil.
In: Economic Journal, Vol. 114, No. 492, 01.01.2004, p. 83-101.Research output: Contribution to journal › Article
TY - JOUR
T1 - Tying and innovation
T2 - A dynamic analysis of tying arrangements
AU - Choi, Jay Pil
PY - 2004/1/1
Y1 - 2004/1/1
N2 - This paper analyses the effects of tying arrangements on R and D incentives. It shows that tying is a means through which a firm can commit to more aggressive R and D investment in the tied goods market. Tying also has the strategic effect of reducing rivals' incentives to invest in R and 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 discussed.
AB - This paper analyses the effects of tying arrangements on R and D incentives. It shows that tying is a means through which a firm can commit to more aggressive R and D investment in the tied goods market. Tying also has the strategic effect of reducing rivals' incentives to invest in R and 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 discussed.
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UR - http://www.scopus.com/inward/citedby.url?scp=0842279661&partnerID=8YFLogxK
U2 - 10.1046/j.0013-0133.2003.00178.x
DO - 10.1046/j.0013-0133.2003.00178.x
M3 - Article
AN - SCOPUS:0842279661
VL - 114
SP - 83
EP - 101
JO - Economic Journal
JF - Economic Journal
SN - 0013-0133
IS - 492
ER -