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Optimal allocation of ownership rights in dynamic R&D alliances

  • Rosenkranz, Stephanie
  • Schmitz, Patrick W.

We explore the dynamic evolution of property rights regimes in R&D alliances using the incomplete contract approach pioneered by Grossman, Hart and Moore (Hart and Moore, Journal of Political Economy (1990), and Grossman and Hart, Journal of Political Economy (1986)). In contrast to the standard analysis, the productive asset is an excludable public good such as a patent. Moreover, both firms can decide whether to disclose their know-how and invest effort. Know-how that has once been released cannot be concealed later. We characterize different scenarios in which the optimal ownership structure may change over time due to a trade-off between inducing know-how disclosure and ensuring maximum effort.

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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 43 (2003)
Issue (Month): 1 (April)
Pages: 153-173

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Handle: RePEc:eee:gamebe:v:43:y:2003:i:1:p:153-173
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  1. Nöldeke, Georg & Schmidt, Klaus M., 1998. "Sequential investments and options to own," Munich Reprints in Economics 19327, University of Munich, Department of Economics.
  2. Bhattacharya, S. & Glazer, J. & Sappington, D., 1991. "Licensing and the Sharing of Knowledge in Research Joint Ventures," Discussion Paper 1991-20, Tilburg University, Center for Economic Research.
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  8. d'ASPREMONT, Claude & BHATTACHARYA, Sudipto & GERARD-VARET, Louis-André, . "Knowledge as a public good: efficient sharing and incentives for development effort," CORE Discussion Papers RP 1356, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  13. De Fraja, Giovanni, 1993. "Strategic spillovers in patent races," International Journal of Industrial Organization, Elsevier, vol. 11(1), pages 139-146, March.
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