R&D Alliances as Non-cooperative Supergames
AbstractR&D alliances (Research Joint Ventures or other institutional forms) normally involve repeated, non-contractible actions (investments in R&D), and uncertainty regarding both success and the termination date. Accordingly, we model these agreements as equilibria of infinite-period supergames. Our approach is normative, namely that of finding optimal equilibria from the perspective of the firms involved in the agreement. The results show that repeated interaction allows for important gains in equilibrium pay-offs. The optimal solutions are still inefficient from the firms’ perspective, however. The sources of inefficiency include delay in investment outlays, suboptimal levels of investment, and abandonment of profitable projects. Lastly, we consider R&D cooperation between firms that also interact in the product market. In some cases, product market interaction is irrelevant from the perspective of optimal R&D agreements. In other cases, optimal agreements imply that firms behave more aggressively in the product market.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1439.
Date of creation: Jul 1996
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Horbulyk, Theodore M., 2000. "Strategy And Incentives In The Compulsory Licensing Of Intellectual Property In Agriculture," Proceedings:Transitions in Agbiotech: Economics of Strategy and Policy, June 24-25, 1999, Washington, D.C. 26011, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
- L. Lambertini & C. Iori, 2000. "Joint Venture for Product Innovation and Cartel Stability under Vertical Differentiation," Working Papers 385, Dipartimento Scienze Economiche, Universita' di Bologna.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.