Vertical Structure And Firms Innovation Incentive

This dissertation focuses on the relationship between vertical structure and firm's innovation incentives. From the different innovation incentives and the changes of innovation ability within the firms from different segments of global value chain(GVC), We try to explain the significant difference business performance and solve local enterprises upgrade problems.Under free entry conditions, the market structure is endogenours with the leader's innovation behavior. The leader of GVC should invest more R & D to make the market structure of GVC strategic segments, tends to highly concentrated (full or oligopolistic structure). If the leader could control the rate of technology spillovers, leader would invest more R & D than the follwers'.The position of leadership would be maintained or even strengthened. Only when it exit higher levels of asymmetric knowledge spillovers, the follwers would be like to invest more R & D than the leader's, the gap of technology will be closedUnder free entry conditions, the firm numubers of each GVC segments industry is incresed as entry barriers and market size are increased. The firms numuber between Upstream and downstream industry has positive effect, it leads to the evolution of GVC vertical structure. The increase (or deccrease)of firm number in vertical related industry woule incentive firms invest more (or lease) R & DGVC Leader firms can also increase their R & D investment incentives, and reducing competitors and vertical related firms'innovation incentives through endogenous integrated strategy.Through the case studies of China's automotive industry firms technological innovation, our theory sounds to be a good way to explain the firms innnovation behaviors. In the end, many policy recommendations be made to improve the innovation capability of local firms and the way to upgrade in GVC.