Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
6894587 | European Journal of Operational Research | 2018 | 30 Pages |
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 (research and development) activities to increase the perceived quality of the final product. It is shown that the replication of the vertically integrated monopolist's performance can be attained using a two-part tariff 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.
Keywords
Related Topics
Physical Sciences and Engineering
Computer Science
Computer Science (General)
Authors
Luca Lambertini,