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This paper examines the dynamic impact of the cooperative vertical relationship between small and medium sized firms and large firms on consumer welfare. We show that price of downstream large firm rises while it is taking over upstream small and medium sized firms and falls after upstream monopolization through 'cooperative vertical relationship' is complete, and in the long run rises again. We argue that the long-run rise of price is due to the fact the cooperative vertical relationship' is complete, and in the long run rises again. We argue that the long-run rise of price is due to the fact that the cooperative vertical relationship works as an entry barrier to potential competitors and thus stifles competition in both downstream and upstream markets.

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The aim of this study is to identify the impact of supplier involvement in new product development on supplier performance, innovation and quality in the Korean electronics industries. The sample consists of forty-five first-tier electronic components suppliers. We employed archival data analysis. Survey, in-depth interview on manufacturers as well as suppliers. We found strong evidence that a higher level of suppliers' involvement positively influences financial performance. This means that the assembler acknowledges the participants' effort and shares the joint benefits. But the sharings are done confidentially rather than openly. We also found that participating suppliers are significantly more innovative than non-participants. The results imply that collaborative subcontracting relations produce superior performance as compared to traditional bargaining-oriented practices.

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