Monopolistic input suppliers drive stronger R&D cooperation among final-good producers.
The article explores how the structure of a competitive market for inputs influences companies' decisions to collaborate on research. The study shows that when input suppliers have a lot of power, companies are more likely to work together on research projects. Surprisingly, companies invest more in research when facing a powerful input supplier compared to when they have more options. The findings suggest that integrated innovation and competition policies could help promote collaboration and innovation in industries with dominant input suppliers.