We use a duopoly to show how the possibility of licensing ex post R&D affects the decision on R&D organization. We show that whether licensing ex post R&D affects the incentive for doing cooperative R&D depends on the nature of cooperative R&D. If the firms do cooperative R&D to avoid duplication in R&D process then the possibility of licensing ex post R&D may influence the decision on R&D organization provided one firm behaves like a Stackelberg leader in the product market. If the firms behave like Cournot duopolists then the possibility of licensing ex post R&D can influence the decision on R&D when the firms do cooperative R&D to share the cost of doing R&D. In the course of analysis, we show the implication of horizontal product differentiation on the R&D organization and technology licensing. Further, we show the importance of monetary transfer under cooperative R&D.
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Length: 30 pages Date of creation: Jul 2001 Date of revision: Publication status: Published in Group Decision and Negotiation, Vol. 13(3), May 2004, pages 243 - 58. [ doi:10.1023/B:GRUP.0000031079.32373.a4 ] Handle: RePEc:kee:keeldp:2001/02
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Find related papers by JEL classification: L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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