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Know-how sharing with stochastic innovations

Author

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  • B. Curtis Eaton
  • Mukesh Eswaran

Abstract

We provide a model of know-how sharing between competing firms in which each of two firms gets a stochastic innovation in its stock of know-how in every period. Separately considering the cases when innovations are indivisible and divisible, we examine the nature of the subgame perfect sharing agreements that can obtain. We discover that both stochasticity and indivisibility undermine the ability to support sharing. Furthermore, we find that there are equilibria in which know-how sharing can be intermittent and that small innovations are more likely to be shared than large ones, when innovations are divisible but not necessarily when they are indivisible.

Suggested Citation

  • B. Curtis Eaton & Mukesh Eswaran, 2001. "Know-how sharing with stochastic innovations," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 525-548, May.
  • Handle: RePEc:cje:issued:v:34:y:2001:i:2:p:525-548
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    Citations

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    Cited by:

    1. Paul Muller & Julien Pénin, 2006. "Why do firms disclose knowledge and how does it matter?," Journal of Evolutionary Economics, Springer, vol. 16(1), pages 85-108, April.
    2. Helsley, Robert W. & Strange, William C., 2004. "Knowledge barter in cities," Journal of Urban Economics, Elsevier, vol. 56(2), pages 327-345, September.
    3. Yin Li & Jan Youtie & Philip Shapira, 2015. "Why do technology firms publish scientific papers? The strategic use of science by small and midsize enterprises in nanotechnology," The Journal of Technology Transfer, Springer, vol. 40(6), pages 1016-1033, December.
    4. Noriaki Matsushima & Susumu Ogawa, 2012. "Profit-Enhancing Know-How Disclosure: A Strategic View," Manchester School, University of Manchester, vol. 80(5), pages 560-579, September.
    5. Jonathan M. Barnett & Gilles Grolleau & Sana El Harbi, 2010. "The Fashion Lottery: Cooperative Innovation in Stochastic Markets," The Journal of Legal Studies, University of Chicago Press, vol. 39(1), pages 159-200, January.
    6. Julien PENIN, 2005. "Open knowledge disclosure, incomplete information and collective innovations," Working Papers of BETA 2005-10, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

    More about this item

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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