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Research joint ventures and optimal R&D policy with asymmetric information

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  • Cassiman, Bruno

Abstract

When to allow Research Joint Ventures (RJVs) or not is an important instrument in the development of an optimal R&D policy. The regulator, however, is unlikely to know all the relevant information to regulate R&D optimally. The extent to which there exist appropriability problems between the firms is one such variable that is private information to the firms in the industry. In a duopoly setting we analyze the characteristics of a second-best R&D policy where the government can either allow RJVs or not and give lump-sum subsidies to the parties involved. The second-best R&D policy without subsidies will either block some welfare improving RJVs or allow some welfare reducing ones. With lump-sum subsidies, the second-best policy trades off the expected subsidy cost with allowing welfare decreasing RJVs or blocking welfare increasing ones.
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  • Cassiman, Bruno, 2000. "Research joint ventures and optimal R&D policy with asymmetric information," International Journal of Industrial Organization, Elsevier, vol. 18(2), pages 283-314, February.
  • Handle: RePEc:eee:indorg:v:18:y:2000:i:2:p:283-314
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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • 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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