Suchergebnisse

This paper considers the role of basic research and development (R&D) investment in vertical markets in which an incumbent owner of a basic technological input faces potential competition. We identify the conditions under which the socially optimal investment in basic research involves entry by new firms. Our main insight is that there is a role for public investment in R&D that appears to have been overlooked in the existing literature. This role draws on the idea that basic R&D adds to the credibility of the threat of the potential development of alternative technologies by reducing their implementation costs.

We examine the empirical research on interfirm contracts that has been inspired by Oliver Williamson's work on transaction costs. We eschew the vast and supportive empirical literature on the make-or-buy decision, covered elsewhere, focusing instead on vertical market restrictions. We organize our discussion around specific restrictions, emphasizing the evidence concerning restrictions, such as contract duration and adjustment clauses, that have been studied most through transaction cost lenses, but also the findings from studies of vertical restraints, namely those restrictions that have been the focus of antitrust policy. We conclude with some general thoughts about how what one can learn from these studies can inform antitrust policy regarding vertical market restrictions.

We examine the empirical research on interfirm contracts that has been inspired by Oliver Williamson's work on transaction costs. We eschew the vast and supportive empirical literature on the make-or-buy decision, covered elsewhere, focusing instead on vertical market restrictions. We organize our discussion around specific restrictions, emphasizing the evidence concerning restrictions, such as contract duration and adjustment clauses, that have been studied most through transaction cost lenses, but also the findings from studies of vertical restraints, namely those restrictions that have been the focus of antitrust policy. We conclude with some general thoughts about how what one can learn from these studies can inform antitrust policy regarding vertical market restrictions.

Abstract
This paper examines the performance of two environmental regulation policies – emission taxes and absolute standards – in a vertical market where an upstream foreign monopolist sells a specific input to two downstream multiproduct firms that generate pollution in the domestic country. Specifically, we use a three-stage game to analyze and compare the two policies for regulating downstream pollution. In the first stage, the domestic government determines an optimal tariff and sets one of the two instruments (taxes or standards) by maximizing social welfare, in stage two, the upstream foreign monopoly sets its input price, and finally, the downstream domestic firms independently make their output and abatement decisions for profit maximization. We find that total emissions are lower under the absolute standard. Nevertheless, the tax dominates the standard in terms of domestic welfare, consumer surplus, and downstream multiproduct firms' profits. Thus, the tax equilibrium leads to a win-win-win situation compared to the standard equilibrium. These results show the non-equivalence of emission taxes and absolute standards in regulating downstream pollution. The analyses suggest that a pollution tax is an economically and politically feasible policy.