Initial Production Cost Research Articles

Repurposing idle wells in the North German Basin as deep borehole heat exchangers

This study investigates the feasibility to repurpose wells from gas production for geothermal closed-loop application in the North German Basin (NGB). The objective for this research topic is to extend the value-added chain of idle wells by re-completion as coaxial deep borehole heat exchangers as an efficient way to produce green energy without drilling new wells by saving the carbon emission and costs of building a new geothermal well. With numerical models of two typical geological settings of the NGB and two different completion schemes, it is possible to simulate the thermal performance over a lifetime of 30 years. The calculated heat extraction rates range from 200 to 400 kW, with maximum values of up to 600 kW. Sensitivity analyses demonstrate that re-completion depth and injection temperature are the most sensitive parameters of thermal output determination. The heat demand around the boreholes is mapped, and heat generation costs are calculated with heating network simulations. The initial production costs for heat are comparable to other renewable energy resources like biomass and competitive against gas prices in 2022. This study highlights available geothermal resources’ environmental and economic potential in already installed wells. The application has almost no geological and no drilling risks and may be installed at any idle well location.

Data element investment strategy: How can leaders and followers innovate in dynamic market environments.

In the era of the digital economy, the data element investment strategy decisions and game mechanisms of leaders and followers are crucial issues to be studied. To explore the environment in which digital collaboration between enterprises benefits both parties, this study initially proposes a three-stage game model of leaders and followers based on the sequential game method. Subsequently, we analyze the investment strategy choices for leading and following enterprises across six scenarios within dynamic market environments. Finally, numerical simulations are employed to examine the effect of both strategies on the industry and society as a whole. The simulation shows that (1) The cooperation strategy is a more effective approach for enhancing data-driven innovation performance, but when it comes to mature markets, this strategy may conflict with the interests of followers. (2) Followers can benefit from the cooperation strategy by significantly boosting the growth rate of data elements, but it may cause enterprises to lose their original market scale. (3) Excessively high initial production costs can negatively affect the innovative performance of the industry and social wealth, whereas mature industries can achieve greater industry performance and social welfare through investment in data elements. Considering the environmental characteristics of the digital economy, the findings of this study elucidate the ramifications of innovation strategies on enterprises, industries, and society, providing positive insights for two types of enterprises with different strengths to make apt decisions regarding digital cooperation.

Enhancing concrete resilience and sustainability through fly ash-assisted microbial biomineralization for self-healing: From waste to greening construction materials

This study presents a pioneering approach that enables remarkable crack closure up to 0.8 mm through stimulated biomineralization aiming to enhance the self-healing capacity of concrete. The innovative synergy tackles the pressing environmental challenges head-on investigates the intriguing germination process of endospores in a cementitious environment and underscores the function of calcareous fly ash in promoting Microbially Induced Calcium Carbonate Precipitation (MICP) by providing additional Ca2+ ions, that are converted into carbonate phases through bacterial metabolic processes. These phenomena are thoroughly examined using an in-situ model particularly concerning MICP in bio-concrete, and thermodynamic modelling is performed to forecast the influence of fly ash on the quantity of Ca-bearing (carbonation sensitive) phases present in the hydrated phases of fly ash-blended cement system. Incorporating 30 % class C fly ash significantly amplifies the biomineralization activity, with 6.5 % calcium carbonate deposition in bio-concrete leds to significant healing activity. Concurrently, MICP contributes to a significant reduction in pore sizes, thereby enhancing the overall durability of concrete. Beyond structural improvements, this innovative bio-concrete formulation showcases an impressive 39 % reduction in CO2 emissions, aligning with sustainability goals. Additionally, repurposing fly ash, typically consigned to landfills, seamlessly adheres to the tenets of a circular economy, despite incurring a 7 % rise in the initial production cost. That promising advanced methodology can deliver transformative environmental benefits, ushering in a paradigm shift in sustainable construction practices, and finding the synergistic interplay between microbial activity and calcium-dependent fly ash.

Analisis Penetapan Harga Jual Produk CV. Abah Ayi Dengan Metode Cost Plus Pricing

The selling price should identify all costs that make a profit in the long run. Cost plus pricing, namely setting the cost by including a factor (percentage) of the selling price or cost in profit. The purpose of this study is to understand how companies determine the selling price of their products using the cost plus CV method. Abah Ayi. Analyze this data using quantitative methods. Research results show that CV. Abah Ayi determines the selling price of their products using traditional methods. The cost calculation of the manufacturing process done by the business owner is not detailed enough, and some costs are calculated using estimated costs. The selling price of products according to this method is lower than the selling price of CV products. Abah Ayi, to earn more profit. The initial production cost of Rp 27,500 becomes Rp 23,000 with the selling price of Rp 30,000 for duck rice, while the initial production cost of Rp 25,000 becomes Rp 21,000 with the same selling price of Rp 27,500 for chicken rice. Research data shows that the difference in profits generated is quite large and the use of cost and markup methods is more effective.
 Keywords: Selling Price, Cost Plus Pricing, CV. Abah Ayi.

Laser Polishing of Polymer Parts Produced with Material Jetting Technology: Effect of Laser Scan Speed, Overlapping and Loop Cycles

In the last year, the industrial production is characterized by the request of high level of product variety that generates a decrease of production volume changing manufacturing from mass production to mass customization. This trend let the conventional production processes, as forming, casting or moulding, expensive because of initial tools production cost that is not more amortized by the high-volume production. A solution to this scenario is to integrate Additive Manufacturing in tools production; this solution guarantees tools cost reduction also if post processes operations are needful to reduce the surface roughness produced by additive processes. Among additive processes, Material Jetting is able produce parts with guaranteed high accuracy and low average surface roughness (0.5 µm). However, these standards mainly refer to upfacing surfaces parallel to the print plate, and the roughness obtained on the other surfaces could increase up to 15 µm because of production mechanism. To improve parts roughness in this study, the laser polishing process was tested; different experimental tests were executed to investigate the effects of scan speed, overlapping and loop cycles. The results demonstrated that it is possible to improve the surface finish and reduce the roughness by 70% at the expense of dimensional accuracy.

Cost-Benefit Implications of Conservation Agriculture with Trees in the Dry Lands of Machakos County, Kenya

The adoption of conservation agriculture and agroforestry has been cited as the solution to the degradation and low profitability challenges in the drylands. The two systems have been known to result in high profitability through the improvement of yields and lowering of crop production costs. The study was carried out as part of ongoing experimentation established in the short rains (SR) season of 2012 by the World Agroforestry Centre in an on-station site at the Agricultural Training Centre (ATC) in Machakos County, Kenya. The trials were based on a split plot arranged in a randomised complete block design with two farming systems (conventional and conservation agriculture) serving as the main blocks, 10 treatments and three replicates, summing to a total of 60 plots. In the fields, three shrub species (Calliandra calothyrsus Meissn., Cajanas cajan (Pigeon pea), and Gliricidia sepium Jacq.) were planted in three different spacing (1.5 x 1 m, 3 x 1 m, 4.5 x 1 m) for maize-legume intercrops. The costs of production were recorded consistently in each season (LR 13, SR 13, and LR14). The maize and legume yields were valued at the market selling price from the local market, and a cost-benefit analysis was done through the calculation of benefit-cost ratios (BCR). The data was statistically analysed using ANOVA and means were separated using LSD at p <0.05. Results showed significantly high BCR under conservation agriculture (p <0.0001) in all seasons with sole CA having the highest BCR of 9.9 in LR 2014. The BCRs were lower in the first season due to high initial production costs, but this increased steadily in the succeeding seasons. The study concludes that conservation agriculture both with trees and as the sole is beneficial to the farmer, with higher net benefits compared to conventional tillage

Planiranje procesa i tehnike optimizacije u aditivnoj proizvodnji

Additive manufacturing, as a production technology and a scientific field, offers a lot of potential for new research, attracts the attention and interest of manufacturing companies and the academic community. With a new approach in product design, a digital connection chain, and the possibility of producing final products with complex configurations, it has significant advantages in relation to conventional production. However, the initial investment and production costs make this technology still inaccessible to a certain number of users, with the tendency for this to change. In this sense, great attention has been paid to additive manufacturing planning, cost analysis and the possibility of optimizing structural and process parameters of production and processes. This paper is intended to explain, in a clear and concise manner, the basic assumptions of the technology, its advantages and certain disadvantages, ongoing and future trends in development as well as current areas of research (cost estimation, multi criteria decision making (MCDM), topology optimization) and applied methods and concepts. The authors believe that this paper will provide additional help in process planning for additive manufacturing as well as promote the necessity for introducing and application of different optimization techniques when designing technology for additive manufacturing.

Three-Dimensional Printing Technologies for Drug Delivery Applications: Processes, Materials, and Effects.

Since the 1930s, new methods of drug delivery, such as implantable devices with drug release control, have been developed. However, manufacturing techniques require bulk due to high initial production costs. Three-dimensional (3D) printing, also known as additive manufacturing or rapid prototyping, allows the fabrication of personalized drug delivery that uses different materials and complex geometries with multiple release profiles, thereby eradicating high initial costs. Different studies have been developed showing the extensive potential of 3D printing for the pharmaceutical industry, and despite in-depth discussions that have been published, there is no comprehensive review of processes, materials, and effects in drug delivery applications thus far. This review aims to fill this gap by presenting the use of 3D printing technology for drug delivery, exposing the different variations of the technique according to the characteristics, material, and dosage form sought. There are seven main categories of 3D printing according to the standards jointly developed by International Organization for Standardization and American Society for Testing and Materials: material jetting, binder jetting, material extrusion, vat photopolymerization, powder bed fusion, sheet lamination, and directed energy deposition. There are different 3D fabrication processes used for drug delivery applications depending on the dosage form and material applied. In this context, polymers, glasses, and hydrogels represent the most frequent materials used. 3D printing allows different forms of drug dosage. Oral, topical, rectal and vaginal, parental and implantable are discussed in this paper, presenting the identification of the type of 3D printing technology, the active pharmaceutical ingredient, formulation, and pharmaceutical effect. The main aim of this paper is to offer insights to people from academy and industry who are interested in the advancement of drug delivery and in knowing the future directions in the development of 3D printing applications in this area.

Tangled Tales of Mycelium and Architecture: Learning From Failure

Architects, artists and engineers around the world have been experimenting with the potential of mycelium, the vegetative body of a fungus, as a future building material for the past 15 years. It shares many of the positive material attributes of polystyrene but unlike the synthetic material it is fully sustainable and completely biodegradable. Mycelium has also proved to be simple to grow at scale. Its capacity to rapidly grow its tangled hyphae in a multiplicity of directions, digesting nothing more than organic waste, has shown promise for the production of a variety of materials for the building industry. But despite this, mycelium has struggled to find a market within the building industry. Drawing on the literature, this article argues that the challenges have been psychological, aesthetic and economic, rather than technical. Western industrial systems have conditioned us to expect material cultures to be clean, precise and durable. Mycelium is messy and some fungi are known pathogens. Like any living creature it can be unpredictable. Further, while the materials for growing mycelium are cheap, initial production costs for mass production and distribution typical of industrial fabrication are high. The risk for investors in the absence of an assured market stymied early forays into production. But as the environmental crisis becomes more urgent, there is evidence of a growing interest in finding new avenues for production. Centralised large-scale production is only one way forward. Another, which learns from early failures, is mass production through a multiplicity of micro-scale, do-it-yourself systems.

Growth performance and economic analysis of hybrid Catfish (Channel Catfish Ictalurus punctatus ♀ × Blue Catfish, I. furcatus ♂) and Channel Catfish (I. punctatus) produced in floating In-Pond Raceway System

The In-Pond Raceway System (IPRS) is a promising technology that addresses issues that have troubled the U.S. catfish industry for decades. This case study evaluated hybrid and Channel Catfish growth performance and economic efficiency in two sizes of floating IPRS units using two stocking density approaches. Each IPRS unit was placed into a 0.4 ha pond. In year 1, hybrids were raised in the IPRS and net yields ranged from 12,848 kg/ha to 15,330 kg/ha, with survival from 75%–97%. Individual hybrid Catfish harvest weights ranged from 671 to 825 g (268 days of production) with 90–97% of the fish in the premium size class (0.454–1.82 kg) and had a feed conversion ratio (FCR) of 1.50–1.64. In year 2, Channel Catfish were raised in the IPRS, with net yields from 7,416 to 9,819 kg/ha, and survival from 67% to 94%. The average Channel Catfish weight at harvest ranged from 525 to 861 g (217 days of production) with 79–94% in the premium size class and a FCR range from 1.78 to 2.40. Total investment for each 63 m3 raceway was US$34,570 in year 1, plus an additional US$2,280 for year 2. Total investment for each 45 m3 raceway was US$14,949 in year 1, plus an additional US$2,280 for year 2. Income above variable cost was positive for all four raceways in year 1, though negative for large raceways when fixed costs were included. In year 2, all four raceways had negative incomes above variable costs and net returns. This IPRS study showed better performance and economic results for hybrid over Channel Catfish and further research is needed to assess more efficient management strategies for Channel Catfish and, also, to lower initial investment and production costs.

Techno-Economic Analysis of Fast Pyrolysis of Date Palm Waste for Adoption in Saudi Arabia

Date palm trees, being an important source of nutrition, are grown at a large scale in Saudi Arabia. The biomass waste of date palm, discarded of in a non-environmentally-friendly manner at present, can be used for biofuel generation through the fast pyrolysis technique. This technique is considered viable for thermochemical conversion of solid biomass into biofuels in terms of the initial investment, production cost, and operational cost, as well as power consumption and thermal application cost. In this study, a techno-economic analysis has been performed to assess the feasibility of converting date palm waste into bio-oil, char, and burnable gases by defining the optimum reactor design and thermal profile. Previous studies concluded that at an optimum temperature of 525 °C, the maximum bio-oil, char and gases obtained from pyrolysis of date palm waste contributed 38.8, 37.2 and 24% of the used feed stock material (on weight basis), respectively, while fluidized bed reactor exhibited high suitability for fast pyrolysis. Based on the pyrolysis product percentage, the economic analysis estimated the net saving of USD 556.8 per ton of the date palm waste processed in the pyrolysis unit. It was further estimated that Saudi Arabia could earn USD 44.77 million per annum, approximately, if 50% of the total date palm waste were processed through fast pyrolysis, with a payback time of 2.57 years. Besides that, this intervention will reduce 2029 tons of greenhouse gas emissions annually, contributing towards a lower carbon footprint.

The Potential of Big Data Analysis in the Shipbuilding Industry: A Way of Increasing Competitiveness

It is possible to exploit potentials of Big Data in the shipbuilding industry in order to increase efficiency and company performance. Big Data analysis will probably have a great impact on strengthening the competitiveness in the whole sector, providing various types of benefits and effective support to the decision-making system. Academics maintain that analysis methods and algorithms can offer spe-cific guidelines to managers and practitioners in order to satisfy their information needs. Even though it is recognized that the techniques for Big Data analysis are relevant, only a few studies provide practical guidelines on how to apply these techniques in specific industries like shipbuilding. This preliminary study aims to develop a conceptual framework of Big Data anal-ysis based on the value chain approach. By using a deductive methodology, the framework is built taking into consideration four phases of the value chain in the shipbuilding industry - i.e. pre-production, design, production, and post-production. For its relevance, the study considers the pre-production phase, trying to classify data sources, analysis methods, and algorithms for the main activities of this node and also providing various suggestions to shipbuilding managers and practitioners. The researchers develop the framework by considering secondary data collected from the literature analysis. Our results can successfully support decision making in shipbuilding companies, making processes and operations more cost-effective and helping companies be more competitive. Specifically, in the pre-production node this will lead to real-time demand forecasting and a more reliable estimation of initial production costs.

Managerial overconfidence, overinvestment, and R&D spillover

This paper examines whether a firm will select an overoptimistic manager when a cost‐reduction investment has a spillover effect. We consider a Cournot competition model where R&D investment ex ante occurs before the process of product market competition. Our analysis reveals that there exists a unique and symmetric equilibrium for firms to delegate overoptimistic managers. We show that only when the spillover effect is sufficiently high do firms benefit from delegation. Furthermore, the equilibrium confidence level and investment decision first decrease and then increase as the spillover parameter changes. As the initial production cost increases, the equilibrium performance becomes worse.

Current state-of-the-art in plant-based antibody production systems

Monoclonal antibodies represent the major class of biopharmaceutical products (for therapeutics and diagnostics) with an increasing demand that reaches several tons per year worldwide. Traditional large-scale manufacturing processes are based on stirred tank bioreactors for the growth of Chinese Hamster Ovary cells (CHO) which requires high initial investments and production costs. Therefore, there is an urgent need for alternative production platforms that can at least act as a complement to the over-exploited mammalian fermentation systems. In this perspective, the use of plants for the large-scale production of biopharmaceuticals ('Molecular farming') represents an interesting and mature technology that has already proved its benefits in terms of safety, scalability, rapidity and reduced manufacturing costs. Here we discuss the recent advances in the production of monoclonal antibodies (mAbs) in plant-based platforms such as transgenic plants, tissue and cell cultures and transient expression systems.

Development and Performance Evaluation of a Spring-Loaded Hand Operated Maize Sheller with Variable Mechanisms

A spring-press, variable mechanism hand operated maize sheller was developed, constructed and tested with corn cobs at 12.6% moisture content, wet basis (w.b) and its shelling performances compared. The machine is lever operated with a spring load-return mechanism and a cob constrictor with changeable shelling mechanisms (spike tooth, rasp bar and star tooth), and a tilted tray for grain collection. The overall dimension of the machine is 520mm x 520mm x 400mm. The machine overall performance is 20.62kg/hr shelling capacity, 85.13% shelling efficiency and 2.13% kernel damage. Comparing the performance of the three shelling mechanisms; rasp bar, spike tooth and star tooth, shelling capacity (16.2, 26.0, 19.67) kg/hr.; shelling efficiency (82.22%, 87.19%, 85.97%); and % kernel damage (0.00, 0.74, 0.51) respectively, the star mechanism has a higher capacity of 26.0kg/hr. The mean kernel damage is higher for star tooth, whereas it is zero for rasp bar. In comparison with conventional hand-palm shelling method (100% shelling efficiency, 13.83kg/hr shelling capacity and 0% kernel damage), the hand operated sheller has a better output capacity, reasonable shelling efficiency but slightly higher kernel damage. By implication, machine performance efficiency does not give a true reflection of how effective a system work until the machine capacity is determined. The sheller ease household shelling maize for consumption with initial low production cost of N13, 100.00 (~$30).

Development and Performance Evaluation of a Spring-Loaded Hand Operated Maize Sheller with Variable Mechanisms

A spring-press, variable mechanism hand operated maize sheller was developed, constructed and tested with corn cobs at 12.6% moisture content, wet basis (w.b) and its shelling performances compared. The machine is lever operated with a spring load-return mechanism and a cob constrictor with changeable shelling mechanisms (spike tooth, rasp bar and star tooth), and a tilted tray for grain collection. The overall dimension of the machine is 520mm x 520mm x 400mm. The machine overall performance is 20.62kg/hr shelling capacity, 85.13% shelling efficiency and 2.13% kernel damage. Comparing the performance of the three shelling mechanisms; rasp bar, spike tooth and star tooth, shelling capacity (16.2, 26.0, 19.67) kg/hr.; shelling efficiency (82.22%, 87.19%, 85.97%); and % kernel damage (0.00, 0.74, 0.51) respectively, the star mechanism has a higher capacity of 26.0kg/hr. The mean kernel damage is higher for star tooth, whereas it is zero for rasp bar. In comparison with conventional hand-palm shelling method (100% shelling efficiency, 13.83kg/hr shelling capacity and 0% kernel damage), the hand operated sheller has a better output capacity, reasonable shelling efficiency but slightly higher kernel damage. By implication, machine performance efficiency does not give a true reflection of how effective a system work until the machine capacity is determined. The sheller ease household shelling maize for consumption with initial low production cost of N13, 100.00 (~$30).

Deepwater Hydraulic Well Intervention: A Creative Hybrid Solution

This article, written by JPT Technology Editor Chris Carpenter, contains highlights of paper OTC 26984, “Deepwater Hydraulic Well Intervention in Tahiti: A Creative Hybrid Solution,” by J. Beard, J. Boiteau, R. Chauvin, B. Conner, C. Courtois, and T. Theall, Chevron, prepared for the 2016 Offshore Technology Conference, Houston, 2–5 May. The paper has not been peer reviewed. Copyright 2016 Offshore Technology Conference. Reproduced by permission. This technical paper describes the planning and execution of a multiservice-vessel (MSV)-based hydraulic-intervention campaign in Chevron’s Tahiti field in the US Gulf of Mexico. The five-well campaign was executed incident-free during 2015, delivering a total treatment volume of almost 30,000 bbl, resulting in 8,500-BOPD gross initial production uplift and cost savings of 85% in comparison with traditional rig-based methods. Introduction The Tahiti reservoirs comprise stacked turbidite sandstone deposits. The three major reservoirs are M-XX, M-YY, and M-ZZ, which account for approximately 82, 9, and 9% of proved reserves in the field, respectively. The M-XX reservoir, of which all intervention candidate wells are a subset, is further separated into two distinct pay intervals, the M-XXA and the M-XXB. Tahiti producers are installed as cased-hole frac-packed completions, with stacked frac packs and commingled production the norm for these M-XXA and M-XXB wells. Of the six “first-oil” production wells, there are two exceptions to this norm; one well (Well 2) was completed in the M-XXA interval only, and another well (Well 5) was completed as a single-trip frac pack across the two M-XXA and M-XXB intervals. All Tahiti wells are installed with downhole gauges, which, in conjunction with subsea trees and topside instrumentation, allow continuous real-time monitoring of pressure, temperature, and rate-estimate profiles. Over the 1–2 years following attainment of peak production, results of routine well tests showed noticeable productivity-index (PI) declines on several wells, and pressure-transient- analysis evaluations revealed significant skin increases. By the time of mobilization on the subject-well intervention campaign, skin values on the candidate wells would range from 36 to 212, with PI values as low as 3 to 30% of original levels, and one well (Well 2) was preemptively shut in to preserve productivity/injectivity in order to allow successful hydraulic intervention. A dedicated initiative to integrate specific field data, laboratory data, and simulation modeling led to the diagnosis of fines migration as the primary contributor to skin issues. Acid stimulation became the identified solution, thus initiating detailed core testing, fluid-compatibility testing, and materials-compatibility qualification regimes to qualify a suitable formulation. Ultimately, a combination organic-acid/mud-acid formulation was selected. With this key qualification milestone achieved, and presented with a single-well acid-stimulation opportunity that was enabled by a rig-availability slot and a candidate well that was known to be beyond the pressure rating of available subsea-well-intervention systems, a rig-based early acid-stimulation job was performed in late 2014.

High-Performance Si/SiOx Nanosphere Anode Material by Multipurpose Interfacial Engineering with Black TiO(2-x).

Silicon oxides (SiOx) have attracted recent attention for their great potential as promising anode materials for lithium ion batteries as a result of their high energy density and excellent cycle performance. Despite these advantages, the commercial use of these materials is still impeded by low initial Coulombic efficiency and high production cost associated with a complicated synthesis process. Here, we demonstrate that Si/SiOx nanosphere anode materials show much improved performance enabled by electroconductive black TiO(2-x) coating in terms of reversible capacity, Coulombic efficiency, and thermal reliability. The resulting anode material exhibits a high reversible capacity of 1200 mAh g(-1) with an excellent cycle performance of up to 100 cycles. The introduction of a TiO(2-x) layer induces further reduction of the Si species in the SiOx matrix phase, thereby increasing the reversible capacity and initial Coulombic efficiency. Besides the improved electrochemical performance, the TiO(2-x) coating layer plays a key role in improving the thermal reliability of the Si/SiOx nanosphere anode material at the same time. We believe that this multipurpose interfacial engineering approach provides another route toward high-performance Si-based anode materials on a commercial scale.

Technological Progress and Sectoral Shares

This paper studies the effect of differences in the rate of technological progress between sectors on the relative sizes of those sectors in terms of revenues. There are two sectors: a stagnant sector, where productivity does not change over time, and a progressive sector, where costs decrease over time due to exogenous technological progress. We consider a conjectural variation approach to competition in the progressive sector which encompasses perfect competition, Cournot oligopoly and monopoly. The main result of the paper is that the share of the stagnant sector increases over time when demand in the progressive sector is inelastic. Under perfect competition, when initial production costs in the progressive sector are sufficiently low (so that demand is inelastic), the share of the stagnant sector rises over time. Whereas, when initial production costs are sufficiently high (so that demand is elastic), the relative size of the stagnant sector is U-shaped with respect to time. Under monopoly, the share of the stagnant sector always decreases over time. However, the decline in that share is much more rapid the higher are initial costs in the progressive sector. The interaction of market structure and price elasticity (or initial costs) determines how the relative sizes of sectors differing in productivity growth evolve over time. The relationship with the cost disease literature is discussed.

R&D Spillovers and the Increasing of a Supplier's Research Activities

A conceptual framework is proposed for analyzing how differences in supplier's R&D reserve can impact on a supplier's decision to increase its R&D activities. A central finding is that the integration of product markets can generate an added incentive to undertake R&D activities to buyer's location. A three-stage analysis of a non-cooperative game is proposed, which entails cost-reducing process innovation in a supply chain model of duopoly. Each supplier's technological efficiency depends not only on its investment in applied R&D, but also on its absorption of supplier and buyer fundamental R&D, as well as the extent to which the latter are substitutes or complements. In a first stage, a supplier's absorption of buyer fundamental R&D can be impacted by a decision to focus R&D activities to buyer's location. The interrelation between this decision and initial production costs is also explored.