Research On Downstream Firms' Technological Innovation Strategies Under Different Market Power Structure

With the rapid development of market environment,science and technology,the competition among firms become increasingly fierce.In order to gain more and more competitive advantages,firms pay more and more attention to technology innovation.Technology innovation is the necessary condition for the sustainable development of firms.However,it is often affected by high cost,high risk,and low success rate factors when firms take technology innovation.By sharing risk with other firms in supply chain,firms can gain more complementary advantages and reduce the cost of technology innovation effectively,which also shorten the time for innovation and improve their profitabilities.As the main body of self-interest,firms often use power to influence the behavior of other stakeholders in order to maximizam their profit.Therefore,the technology innovation in the supply chain will be influenced by the different market power between the upstream and downstream firms.In this paper,considering the technology spillover effect and other factors,based on an upstream and two downstream manufacturers in supply chain under three different market power structures,namely supplier Stackelberg leader,manufacturer Stackelberg leader and vertical Nash power structure,we research the innovation strategies for manufacturers,social welfare and so on.First,we research the optimal innovation strategies for manufacturers under three market power structures.The results show that when the original manufacturers' production cost is low or the technology spillover is a certain value,the optimal innovation strategies for manufacturers are noncooperation;when the original manufacturer production cost is high and the technology spillover isn't a certain value,the optimal innovation strategies for manufacturers are cooperation.Secondly,based on the optimal innovation strategies for manufacturers,we study how technology spillover influences the corresponding equilibrium results.It shows that when technology spillover reaches a critical value or manufacturers' original production cost is low,the optimal manufacturers' strategies are noncooperation,R&D output is negatively related to technology spillover,and the manufacturers' equilibrium profits is positively related to the technology spillover,manufacturers' equilibrium production,equilibrium price of intermediate product and the supplier's equilibrium profit has nothing to do with technology spillover;When the manufacturer original marginal production cost is low,and the strategies of the manufacturers are cooperation,relevant equilibrium results related with technology spillover is the same as the manufacturers' strategy for non-cooperation;When the marginal cost of production is high but the technology spillover isn't a certain value,all corresponding equilibrium results are positively correlated with technology spillover.Finally,we study how the different market power structures influence firms' profits,consumer surplus and social welfare.When the level of technology spillover is higher or lower and the manufacturers' initial marginal production is high,the equilibrium profit of the supplier is the largest under the vertical Nash structure and it is smallest when manufacturers are Stackelberg leaders.The equilibrium profit of the manufacturers are the largest under the vertical Nash structure and they are smallest when supplier is Stackelberg leader.If the degree of technology spillover is high,the surplus of consumers is the largest when manufacturers are Stackelberg leaders;If the degree of technology spillover is low,the surplus of the consumer is the largest under the vertical Nash structure;No matter the degree of technology spillover,the surplus of the consumer is the smallest when supplier is Stackelberg leader.Social welfare is the largest when manufacturers are Stackelberg leaders and smallest under the vertical Nash structure.