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Oxford Economic Papers Advance Access originally published online on August 20, 2004
Oxford Economic Papers 2004 56(4):745-749; doi:10.1093/oep/gpf066
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© Oxford University Press 2004; All rights reserved

Process and product R&D by a multiproduct monopolist: a reply to Lin

Luca Lambertini

Dipartimento di Scienze Economiche, Università di Bologna, Strada Maggiore 45, 40125 Bologna, Italy; e-mail: lamberti{at}spbo.unibo.it

With reference to Lambertini (2003), Lin correctly points out that, if R&D efforts for process innovation are endogenous, then process and product R&D are strategic complements. Then, he also proves that the opposite holds when spillovers are nil. Objecting to Lin's second claim, I show that monopoly profits are everywhere increasing in the extent of information sharing within the firm. Consequently, the full internalisation of spillovers restores the complementarity between process R&D and product proliferation.


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