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Optimal Allocation of Ownership Rights in Dynamic R&D Alliances

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  • Rosenkranz, Stephanie
  • Schmitz, Patrick W.

Abstract

We explore the dynamic evolution of property rights regimes in R&D alliances using the incomplete contract approach pioneered by Grossman, Hart and Moore (Hart and Moore, Journal of Political Economy (1990), and Grossman and Hart, Journal of Political Economy (1986)). In contrast to the standard analysis, the productive asset is an excludable public good such as a patent. Moreover, both firms can decide whether to disclose their know-how and invest effort. Know-how that has once been released cannot be concealed later. We characterize different scenarios in which the optimal ownership structure may change over time due to a trade-off between inducing know-how disclosure and ensuring maximum effort.

Suggested Citation

  • Rosenkranz, Stephanie & Schmitz, Patrick W., 2001. "Optimal Allocation of Ownership Rights in Dynamic R&D Alliances," CEPR Discussion Papers 2698, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2698
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    More about this item

    Keywords

    R&d alliances; Property rights; Partnerships; Incomplete contracts;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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