Suppliers play a major role in innovation processes. We analyze ownership allocations and the choice of R&D technology in vertical R&D cooperations. Given incomplete contracts on the R&D outcome, there is a tradeoff between R&D specifically designed towards a manufacturer (increasing investment...

Suppliers play a major role in downstream firms' innovation processes. We analyze ownership allocations and the choice of technology in vertical research and development (R&D) cooperations. Given that R&D outcomes are not contractible, there is a trade-off between R&D specifically designed...