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Absorptive Capacity in R&D Joint Ventures When Basic Research Is Costly

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Author Info
Mark Frascatore (Clarkson University)
Abstract

``Absorptive capacity" - a firm's ability to assimilate information acquired from other firms - can depend on the amount of basic research it conducts. The optimal expenditures on basic research depend on its costs, and these expenditures in turn affect the amount of applied research a firm conducts to lower production costs. This paper shows that firms' expenditures on basic research can differ from the socially optimal levels, and the difference depends on the magnitude of the basic research costs and the amount of research collaboration between the firms. Policy responses that could bring firm behavior in line with that which is socially desirable are discussed as well.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Topics in Economic Analysis & Policy.

Volume (Year): 6 (2006)
Issue (Month): 1 ()
Pages: 1572-1572
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Handle: RePEc:bep:eaptop:v:6:y:2006:i:1:p:1572-1572

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Related research
Keywords: basic research applied research absorptive capacity research joint ventures

Find related papers by JEL classification:
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

References listed on IDEAS
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  1. Rosenberg, Nathan, 1990. "Why do firms do basic research (with their own money)?," Research Policy, Elsevier, vol. 19(2), pages 165-174, April. [Downloadable!] (restricted)
  2. Cassiman, Bruno & Perez-Castrillo, David & Veugelers, Reinhilde, 2002. "Endogenizing know-how flows through the nature of R&D investments," International Journal of Industrial Organization, Elsevier, vol. 20(6), pages 775-799, June. [Downloadable!] (restricted)
    Other versions:
  3. Joanna Poyago-Theotoky, 1999. "A Note on Endogenous Spillovers in a Non-Tournament R & D Duopoly," Review of Industrial Organization, Springer, vol. 15(3), pages 253-262, November. [Downloadable!] (restricted)
  4. Amir, Rabah & Evstigneev, Igor & Wooders, John, 2003. "Noncooperative versus cooperative R&D with endogenous spillover rates," Games and Economic Behavior, Elsevier, vol. 42(2), pages 183-207, February. [Downloadable!] (restricted)
  5. Kogut, Bruce, 1989. "The Stability of Joint Ventures: Reciprocity and Competitive Rivalry," Journal of Industrial Economics, Blackwell Publishing, vol. 38(2), pages 183-98, December. [Downloadable!] (restricted)
  6. Rabah Amir & John Wooders, 1998. "Cooperation vs. competition in R&D: The role of stability of equilibrium," Journal of Economics, Springer, vol. 67(1), pages 63-73, February. [Downloadable!] (restricted)
  7. W. Salant, Stephen & Shaffer, Greg, 1998. "Optimal asymmetric strategies in research joint ventures," International Journal of Industrial Organization, Elsevier, vol. 16(2), pages 195-208, March. [Downloadable!] (restricted)
    Other versions:
  8. Belderbos, Rene & Carree, Martin & Diederen, Bert & Lokshin, Boris & Veugelers, Reinhilde, 2004. "Heterogeneity in R&D cooperation strategies," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1237-1263, November. [Downloadable!] (restricted)
    Other versions:
  9. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December. [Downloadable!] (restricted)
  10. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September. [Downloadable!] (restricted)
  11. Roberto Hern·n & Pedro L. MarÌn & Georges Siotis, 2003. "An empirical evaluation of the determinants of Research Joint Venture Formation," Journal of Industrial Economics, Blackwell Publishing, vol. 51(1), pages 75-89, 03. [Downloadable!] (restricted)
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  12. Henriques, Irene, 1990. "Cooperative and Noncooperative R&D in Duopoly with Spillovers: Comment," American Economic Review, American Economic Association, vol. 80(3), pages 638-40, June. [Downloadable!] (restricted)
  13. Kamien, Morton I. & Zang, Israel, 2000. "Meet me halfway: research joint ventures and absorptive capacity," International Journal of Industrial Organization, Elsevier, vol. 18(7), pages 995-1012, October. [Downloadable!] (restricted)
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This page was last updated on 2008-11-15.

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