{"title":"Centralized Versus Decentralized R&D Within a Multiproduct Monopolistic Firm Under Research Spillovers","authors":"Doori Kim, Sang-Ho Lee, Vasileios Zikos","doi":"10.1002/mde.4404","DOIUrl":null,"url":null,"abstract":"<p>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.</p>","PeriodicalId":18186,"journal":{"name":"Managerial and Decision Economics","volume":"46 2","pages":"795-809"},"PeriodicalIF":2.7000,"publicationDate":"2024-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1002/mde.4404","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Managerial and Decision Economics","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1002/mde.4404","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
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.
期刊介绍：
Managerial and Decision Economics will publish articles applying economic reasoning to managerial decision-making and management strategy.Management strategy concerns practical decisions that managers face about how to compete, how to succeed, and how to organize to achieve their goals. Economic thinking and analysis provides a critical foundation for strategic decision-making across a variety of dimensions. For example, economic insights may help in determining which activities to outsource and which to perfom internally. They can help unravel questions regarding what drives performance differences among firms and what allows these differences to persist. They can contribute to an appreciation of how industries, organizations, and capabilities evolve.
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