IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

R&D Delegation in a Duopoly with Spillovers

  • Versaevel Bruno

    ()

    (EMLYON Business School & GATE (CNRS UMR 5824))

  • Vencatachellum Désiré

    ()

    (African Development Bank)

There is evidence that competing firms outsource R&D to the same independent for-profit laboratory. We draw on this stylized fact to construct a model where two firms in the same industry offer transfer payments in exchange for 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 monetary offers to the laboratory. These offers determine the R&D outcomes, the laboratory's capacity to earn benefits, the profits for the delegating firms, as well as social welfare. We identify the situations in which the laboratory finds it profitable to deliver services to only one firm, or to both of them. In the latter case we compare the delegated R&D game to two other ones where firms conduct in-house R&D, either cooperatively or non-cooperatively. The delegated R&D game Pareto dominates the other two games, and the laboratory earns positive benefits, if and only if R&D services are complementary inside the laboratory, but only limitedly so, and inter-firm spillovers are sufficiently low. The firms' privately-profitable decision to delegate R&D, when the laboratory participates, always benefits consumers.

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.degruyter.com/view/j/bejeap.2009.9.1/bejeap.2009.9.1.2258/bejeap.2009.9.1.2258.xml?format=INT
Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 9 (2009)
Issue (Month): 1 (December)
Pages: 1-42

as
in new window

Handle: RePEc:bpj:bejeap:v:9:y:2009:i:1:n:55
Contact details of provider: Web page: http://www.degruyter.com

Order Information: Web: http://www.degruyter.com/view/j/bejeap

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

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

When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:9:y:2009:i:1:n:55. 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: (Peter Golla)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.