The Allocation of Resources to Cooperative and Noncooperative R&D
AbstractThe precompetitive R&D literature has viewed cooperative and noncooperative R&D as substitutes. In this paper a more realistic approach is taken, where both cooperative and noncooperative R&D are performed in parallel. In the first stage firms determine the optimal investments in both types of R&D, and in the second stage they compete in output. It is found that information sharing between cooperating firms contributes not only to cooperative R&D, but also to noncooperative R&D. The two types of R&D reinforce each other. The level of cooperative R&D may be higher or lower than noncooperative R&D. In a Cournot duopoly, the share of cooperative R&D lies between 20% and 80% of total R&D, and this share increases with spillovers and information sharing. It is always optimal to subsidize half the costs of cooperative R&D, while the subsidy to noncooperative R&D is unchanged form the standard model. Consumers prefer intermediate levels of spillovers and information sharing, while firms prefer higher levels of spillovers, which entail lower levels of information sharing.
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Bibliographic InfoPaper provided by University of Ottawa, Department of Economics in its series Working Papers with number 0403E.
Length: 19 pages
Date of creation: 2004
Date of revision:
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More information through EDIRC
R&D; Cooperative R&D; Innovation; R&D subsidies; R&D policy; Spillovers; Information sharing;
Other versions of this item:
- Gamal Atallah, 2004. "The Allocation Of Resources To Cooperative And Noncooperative R&D ," Australian Economic Papers, Wiley Blackwell, vol. 43(4), pages 435-447, December.
- Gamal Atallah, 2004. "The Allocation of Resources to Cooperative and Noncooperative R&D," CIRANO Working Papers 2004s-01, CIRANO.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
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