| Summary: | 碩士 === 東海大學 === 國際貿易學系 === 98 === This paper attempts to construct an economic model to discuss whether vertical-integrated firms adopt process innovation will enforce non-vertical integrated firms to adopt vertical integration, process innovation, or both? We refer to two related literature, Milliou (2004) and Stefan Buehler, Armin Schmutzler (2008). Milliou (2004) discusses process innovation and spillover effect, and Stefan Buehler, Armin Schmutzler (2008) discusses process innovation and intimidation effect. The different between this paper and two related literature is that we focuses on how decision-making of vertical-integrated firms will affect the decision-making of non-vertical integrated firms. Using the model we derived the following conclusions: (1) Vertical-integrated firms adopt vertical integration will enforce non-vertical integrated firms to adopt vertical integration. (2) Vertical-integrated firms adopt both vertical integration and process innovation will not likely to enforce non-vertical integrated firms to adopt vertical integration. (3) Vertical-integrated firms adopt both vertical integration and process innovation; the higher the degree of R&D diminishing return, non-vertical integrated firms will adopt vertical integration. On the other hand, they will adopt process innovation. (4) If vertical-integrated firms adopt both vertical integration and process innovation, the most appropriate strategy for non-vertical integrated firms is both vertical integration and process innovation.
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