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Hybrid R&D

Author

Listed:
  • Sanjeev Goyal

    (University of Essex, and Faculty of Economics, Erasmus University Rotterdam)

  • Alexander Konovalov

    (Faculty of Economics, Erasmus University Rotterdam)

  • Jose Luis Moraga

    (Groningen University)

Abstract

We 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.)

Suggested Citation

  • Sanjeev Goyal & Alexander Konovalov & Jose Luis Moraga, 2003. "Hybrid R&D," Tinbergen Institute Discussion Papers 03-041/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20030041
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    References listed on IDEAS

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    Cited by:

    1. MAULEON, Ana & SEMPERE-MONERRIS, José & VANNETELBOSCH, Vincent J., 2004. "R&D networks among unionized firms," LIDAM Discussion Papers CORE 2004071, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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    More about this item

    Keywords

    in-house R&D; joint R&D; oligopoly; cooperation;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • 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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