AbstractWe develop a model of R&D collaboration in which individual firms carry out in-house research on core activities and undertake bilateral joint projects on non-core activities with other firms. We develop conditions on the profit functions of the firm under which R&D investments in different projects of a firm are complementary. We show that this condition is met by standard price and quantity setting oligopoly models. We then study the relation between the number of joint projects and investments and profits. In this context, we identify a second aspect of complementarity: Equilibrium investments in in-house as well as in each joint project are increasing in the number of projects. However, we find that an increase in number of joint projects of all firms lowers collective profits, suggesting the presence of excessive incentives for conducting research. This discussion paper has resulted in a publication in the Journal of the European Economic Association . (2008, vol.6, no. 6, pp. 1309-38.)
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 03-041/1.
Date of creation: 05 Jun 2003
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in-house R&D; joint R&D; oligopoly; cooperation;
Other versions of this item:
- Sanjeev Goyal & Alexander Konovalov & Jose Luis Moraga-Gonzalez, 2003. "Hybrid R&D," Economics Discussion Papers 564, University of Essex, Department of Economics.
- Goyal, S. & Konovalov, A. & Moraga-Gonzalez, J.L., 2003. "Hybrid R&D," Econometric Institute Report EI 2003-34, Erasmus University Rotterdam, Econometric Institute.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
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