| Summary: | 碩士 === 東海大學 === 國際貿易學系 === 99 === This paper extend the model of Buehler & Schmutzler (2008) which assume that both the upstream and downstream of the market structure are duopoly. Referring to the Yin & Zuscovitch (1998) which studies the large firms tend to pursue process R&D, while small firms typically try to create a ‘surprise’ through product innovation. Referring to the Symeonidis (2010) which studies the impact of cross-ownership of firms. The primarily difference of this article and the above-mentioned three studies lies in the fact that we assumed the non-vertically integrated firm adopts cross-ownership strategy in the case of product innovation, and compared with the vertically integrated firms. The study want to discuss what the effect on the economic variables when the degree of cross-ownership and the market scale rise. The results are as follows: (1) The strategy of cross-ownership is beneficial to the firms’ profits, especially for the upstream firm. (2) When market size of the new products expands, it is beneficial to the firms’ profits. When market size of the old products shrinking, it is good to holding firm, but not good to others firm. (3) Vertical cross-ownership under the market size changes will strengthen or weaken the firms’ profit.
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