Lambertini, Luca
(2016)
Coordinating R&D efforts for quality improvement along a supply chain.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 20.
DOI 10.6092/unibo/amsacta/4643.
In: Quaderni - Working Paper DSE
(1054).
ISSN 2282-6483.
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Abstract
The optimal design of two-part tariffs is investigated in a dynamic model where two firms belonging to the same supply chain invest in R&D activities to increase the quality of the final product. It is shown that the replication of the vertically integrated monopolist's performance can be attained using a TPT in which the fee is a linear function of either the upstream R&D effort or product quality itself. The possibility of relying on R&D figures appearing in the upstream firm's balance sheet is desirable as quality enhancement might not be observable or verifiable.
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