Work

Centralized Versus Decentralized R&D Within a Multiproduct Monopolistic Firm Under Research Spillovers

Year: 2024

Type: article

Abstract: ABSTRACT This study investigates the R&D organizational structure of a multi‐product monopolistic firm where the central office decides between centralized and decentralized R&D under research spillovers. We demonstrate that decentralized R&D becomes advantageous when the difference between monitoring and coordination costs is relatively high while products are sufficiently differentiated with lower spillovers. We also find that decentralized R&D can yield higher social welfare under moderate spillovers and product differentiation conditions. Our findings underscore the governmental need for a nuanced approach in designing R&D structures, considering the trade‐offs between centralized and decentralized R&D to align producer and consumer incentives.

Source: Managerial and Decision Economics

DOI: 10.1002/mde.4404

Authors: Doori Kim, Sang‐Ho Lee, Vasileios Zikos

Institutions: Chonnam National University, Chulalongkorn University

Language: English

Topic: Merger and Competition Analysis

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,970

Funder: Chonnam National University