Advanced Search
MyIDEAS: Login to save this paper or follow this series

R&D Delegation in a Duopoly with Spillovers

Contents:

Author Info

  • Désiré Vencatachellum

    ()
    (IEA, HEC Montréal)

  • Bruno Versaevel

Abstract

There is evidence that competing firms delegate R&D to the same independent profit-maximizing laboratory. We draw on this stylized fact to construct a model where two firms in the same industry offer transfer payments in exchange of user-specific R&D services from a common laboratory. Inter-firm and within-laboratory externalities affect the intensity of competition among delegating firms on the intermediate market for technology. Whether competition is relatively soft or tight is reflected by each firm’s transfer payment offers to the laboratory. This in turn determines the laboratory’s capacity to earn profits, R&D outcomes, delegating firms’ profits, and social welfare. We compare the delegated R&D game to two other one where firms (i) cooperatively conduct in-house R&D, and (ii) non-cooperatively choose in-house R&D. The delegated R&D game Pareto dominates the other two games, and the laboratory earns positive profits, only if within-laboratory R&D services are sufficiently complementary, but inter-firm spillovers are sufficiently low. We find no room for policy intervention, because the privately profitable decision to delegate R&D, when the laboratory participates, always benefits consumers.

Download Info

If 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.
File URL: http://www.hec.ca/iea/cahiers/2005/iea0501_dv.pdf
Download Restriction: no

Bibliographic Info

Paper provided by HEC Montréal, Institut d'économie appliquée in its series Cahiers de recherche with number 05-01.

as in new window
Length: 57 pages
Date of creation: Jan 2005
Date of revision:
Handle: RePEc:iea:carech:0501

Contact details of provider:
Postal: Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7
Phone: (514) 340-6463
Fax: (514) 340-6469
Email:
Web page: http://www.hec.ca/iea/
More information through EDIRC

Order Information:
Postal: Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7
Email:

Related research

Keywords: Research and development; externalities; common agency.;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Evans, Shane, 2010. "Innovation contracts with leakage through licensing," Working Papers, University of Tasmania, School of Economics and Finance 10282, University of Tasmania, School of Economics and Finance, revised 05 Oct 2010.
  2. Noriaki Matsushima & Koki Arai & Ikuo Ishibashi & Fumio Sensui, 2011. "The effects of non-assertion of patents provisions: R&D incentives in vertical relationships," ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 0807, Institute of Social and Economic Research, Osaka University.
  3. Etienne Billette De Villemeur & Richard Ruble & Bruno Versaevel, 2011. "Coordination and Cooperation in Investment Timing with Externalities ?," Post-Print, HAL halshs-00639471, HAL.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iea:carech:0501. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Patricia Power).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.