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The competition--innovation debate: is R&D cooperation the answer?

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  • Stein E. Østbye
  • Matthew R. Roelofs

Abstract

Firms’ investment in research and development (R&D) depends on both product market competition and R&D cooperation. In this paper, we use a simple duopoly model of product innovation to show that firms should choose to enter into different cooperative R&D arrangements depending on competition. Equilibrium behavior implies different competition--innovation relationships conditional on the nature of the cooperative arrangements that firms join. Therefore, variation in the set of feasible modes of cooperation may explain why different competition--innovation relationships are observed in empirical studies based on field data. Experimental evidence confirms the presence of similar incentives for cooperating despite some deviations from predicted values of R&D.

Suggested Citation

  • Stein E. Østbye & Matthew R. Roelofs, 2013. "The competition--innovation debate: is R&D cooperation the answer?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(2), pages 153-176, March.
    • Handle: RePEc:taf:ecinnt:v:22:y:2013:i:2:p:153-176
    DOI: 10.1080/10438599.2012.724908
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    References listed on IDEAS

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    1. Schulz, Norbert, 2007. "Review of the Literature on the Impact of Mergers on Innovation," ZEW Discussion Papers 07-061, ZEW - Leibniz Centre for European Economic Research.
    2. Schulz, Norbert, 2007. "Review of the Literature on the Impact of Mergers on Innovation," W.E.P. - Würzburg Economic Papers 76, University of Würzburg, Department of Economics.
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    Cited by:

    1. Liu, Ming & Shan, Yanfei & Li, Yemei, 2023. "Heterogeneous Partners, R&D cooperation and corporate innovation capability: Evidence from Chinese manufacturing firms," Technology in Society, Elsevier, vol. 72(C).
    2. Acconcia Antonio & Beraldo Sergio & Capuano Carlo & Stimolo Marco, 2023. "Public Subsidies and Cooperation in Research and Development. Evidence from the LAB," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 23(3), pages 727-760, July.
    3. Basant, Rakesh & Rai, Rajnish, 2013. "Alliance Capability, Governance Mechanisms And Stakeholder Management In Complex Settings," IIMA Working Papers WP2013-05-10, Indian Institute of Management Ahmedabad, Research and Publication Department.

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