ScholarWorks@숙명여자대학교

초록

In this research, I examine the market failure types by comparing the private equilibrium and social optimum in the investment decision of firms in the vertical market structure. I investigate the economic effects of cooperative investment between upstream and downstream firms. Also, I derive various economic factors that affect the investment incentive of firms. The main results of this paper are as follows. First, in the vertical structure, market failure by ‘under-investment’ can occur where the investment cost is at the intermediate level. Second, the cooperative investment between upstream and downstream firm, reduce the scope for which the market failure occurs. Third, for the case where only an upstream firm participates in investment, the investment incentive is higher for the two-part tariff scheme relative to the linear-price scheme. Fourth, for the case of investment by downstream firm, the investment incentive is higher for the linear-price scheme compared to the two-part price scheme. As a result, for the case where investment cost of downstream firm is low and cost reduction by investment is high, the social welfare becomes higher for the linear-price case than for the two-part tariff case. Fifth, as a vertical spillover rate becomes higher, the investment incentive of each firms becomes higher.

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