| Summary: | 碩士 === 東海大學 === 國際貿易學系 === 99 === This paper presents economic modeling approaches for discussing the degree of vertical cross-ownership which affect the market. We also examine the impact of vertical cross-ownership under the different situations of market size. Referring to the Symeonidis (2010) which studies the impact of horizontal cross-ownership, instead, we study the vertical cross-ownership. Referring to the Yin & Zuscovitch (1998) which illustrates the relationship between the firm size and the strategy of innovation, we extend the concept and add product innovation into the model. Referring to the Buehler & Schmutzler (2008) which the upstream and downstream firms are under duopoly markets, we extend it and construct the model to study our subject. Finally, the findings of this paper are：(1) The strategy of vertical cross-ownership can increase the firms’ profit, the upstream firm especially. (2) We find the higher the vertical cross-ownership, the stronger the firms’ profitability. (3) The degree of the cross-ownership will strengthen or weaken the firms’ profitability when the market size changes.
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