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Cooperative R&D under uncertainty with free entry

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  • Erkal, Nisvan
  • Piccinin, Daniel

Abstract

This paper analyzes the effects of cooperative R&D arrangements in a model with stochastic R&D and output spillovers. Our main innovation is to allow for free entry in both the R&D race and product market. Moreover, in contrast with the literature, we assume that cooperative R&D arrangements do not have to include all the firms in the industry. We show that sharing of research outcomes is a necessary condition for the profitability of cooperative R&D arrangements with free entry. The profitability of RJV cartels depends on their size. Subsidies may be desirable in cases of larger RJVs since they are the ones which are less likely to be profitable.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 28 (2010)
Issue (Month): 1 (January)
Pages: 74-85

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Handle: RePEc:eee:indorg:v:28:y:2010:i:1:p:74-85

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Web page: http://www.elsevier.com/locate/inca/505551

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Keywords: Cooperative R&D Research joint ventures Free entry Uncertain R&D Technology spillovers;

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References

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  4. Rabah Amir & John Wooders, 1999. "Effects of One-Way Spillovers on Market Shares, Industry Price, Welfare, and R & D Cooperation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(2), pages 223-249, 06.
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  17. Miyagiwa, Kaz & Ohno, Yuka, 2002. "Uncertainty, spillovers, and cooperative R&D," International Journal of Industrial Organization, Elsevier, vol. 20(6), pages 855-876, June.
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  22. Nisvan Erkal & Daniel Piccinin, 2006. "Horizontal Mergers with Free Entry in Differentiated Oligopolies," Department of Economics - Working Papers Series 976, The University of Melbourne.
  23. Davidson, Carl & Mukherjee, Arijit, 2007. "Horizontal mergers with free entry," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 157-172, February.
  24. Combs, K. L., 1992. "Cost sharing vs. multiple research projects in cooperative R&D," Economics Letters, Elsevier, vol. 39(3), pages 353-357, July.
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Citations

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Cited by:
  1. Kaz Miyagiwa & Aminata Sissoko, 2013. "The free-rider problem and the optimal duration of research joint ventures: theory and evidence from the Eureka program," Working Papers 1302, Florida International University, Department of Economics.
  2. Richard Gretz & Jannett Highfill & Robert Scott, 2012. "R&D subsidy games: a cost sharing approach vs. reward for performance," The Journal of Technology Transfer, Springer, vol. 37(4), pages 385-403, August.
  3. Khazabi, Massoud & Quyen, Nguyen, 2011. "R&D Spillovers, Innovation, and Entry," MPRA Paper 39460, University Library of Munich, Germany.
  4. BHATTACHARYA, Sudipto & D’ASPREMONT, Claude & GURIEV, Sergei & SEN, Debapriya, 2012. "Cooperation in R&D: patenting, licensing and contracting," CORE Discussion Papers 2012055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Dawid, H. & Kopel, M. & Kort, P.M., 2013. "R&D competition versus R&D cooperation in oligopolistic markets with evolving structure," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 527-537.
  6. Federico Etro, 2010. "Endogenous market structures and antitrust policy," International Review of Economics, Springer, vol. 57(1), pages 9-45, March.

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