Study on Size of Vertical RJVs

For a two-tie market structure with oligopoly upstream firms and completely competition downstream firms, analyzes the optimal RJV size on the view of upstream firm, downstream firms and social welfare under fixed fraction cost-sharing mechanism, and the effect on the optimal RJV size by the total R&D cost, cost-sharing parameter. Some conclusions are acquired: the upstream member desires a larger RJV compared to the downstream members; an industry-RJV is also the optimal size under social welfare analysis; government cost subsidies make none use of enlarging RJV, while macro-monitoring to incentive more upstream firms to compete effects well.