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- W1969452974 abstract "We examine the effect of the most-favored-nation provision in input prices on downstream firms' R and D incentives. Contrary to the previous literature, we show that the effect depends on the extent of substitutability between downstream firms if they compete in two-part tariffs. When a downstream firm lowers its marginal cost, it entails two conflicting effects on the upstream firm's pricing for inputs, the standard elasticity effect of penalizing the low-cost firm and the market share effect of rewarding it. If substitutability between downstream products is high enough, the latter dominates the former, and thus downstream firms will choose a higher marginal cost technology under the MFN provision." @default.
- W1969452974 created "2016-06-24" @default.
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- W1969452974 date "2007-02-01" @default.
- W1969452974 modified "2023-10-01" @default.
- W1969452974 title "Reexamining the effect of the most-favored-nation provision in input prices on R and D incentives" @default.
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- W1969452974 doi "https://doi.org/10.1016/j.ijindorg.2006.04.013" @default.
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