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Cooperative R&D under uncertainty with free entry

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  • Erkal, Nisvan
  • Piccinin, Daniel

Abstract

This paper analyzes the effects of cooperative R&D arrangements in a model with stochastic R&D and output spillovers. Our main innovation is to allow for free entry in both the R&D race and product market. Moreover, in contrast with the literature, we assume that cooperative R&D arrangements do not have to include all the firms in the industry. We show that sharing of research outcomes is a necessary condition for the profitability of cooperative R&D arrangements with free entry. The profitability of RJV cartels depends on their size. Subsidies may be desirable in cases of larger RJVs since they are the ones which are less likely to be profitable.

Suggested Citation

  • Erkal, Nisvan & Piccinin, Daniel, 2010. "Cooperative R&D under uncertainty with free entry," International Journal of Industrial Organization, Elsevier, vol. 28(1), pages 74-85, January.
  • Handle: RePEc:eee:indorg:v:28:y:2010:i:1:p:74-85
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    Cited by:

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    2. Khazabi, Massoud & Quyen, Nguyen, 2011. "R&D Spillovers, Innovation, and Entry," MPRA Paper 39460, University Library of Munich, Germany.
    3. Cao, Zong-Hong & Zhou, Yong-Wu & Zhao, Ju & Li, Chang-Wen, 2015. "Entry mode selection and its impact on an incumbent supply chain coordination," Journal of Retailing and Consumer Services, Elsevier, vol. 26(C), pages 1-13.
    4. MIYAGIWA, Kaz & SISSOKO, Amy & SONG, Huasheng, 2015. "The free-rider problem and the optimal duration of research joint ventures: theory and evidence from the Eureka program," Discussion paper series 2015-02, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    5. Richard Gretz & Jannett Highfill & Robert Scott, 2012. "R&D subsidy games: a cost sharing approach vs. reward for performance," The Journal of Technology Transfer, Springer, vol. 37(4), pages 385-403, August.
    6. Sudipto Bhattacharya & Claude d’Aspremont & Sergei Guriev & Debapriya Sen & Yair Tauman, 2014. "Cooperation in R&D: Patenting, Licensing, and Contracting," International Series in Operations Research & Management Science, in: Kalyan Chatterjee & William Samuelson (ed.), Game Theory and Business Applications, edition 2, chapter 0, pages 265-286, Springer.
    7. Simon P. Anderson, Nisvan Erkal and, 2009. "Aggregative Oligopoly Games with Entry," Department of Economics - Working Papers Series 1175, The University of Melbourne, revised 2013.
    8. Federico Etro, 2010. "Endogenous market structures and antitrust policy," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 57(1), pages 9-45, March.
    9. Banerjee Tannista & Sengupta Aditi, 2019. "Believe It or Not: Strategic Licensing Makes R&D Alliance Profitable," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-6, October.
    10. Chiara CONTI, 2013. "Asymmetric information in a duopoly with spillovers: new findings on the effects of RJVs," Departmental Working Papers 2013-04, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    11. Jingong Huang, 2018. "Technology Network, Innovation And Growth," 2018 Meeting Papers 178, Society for Economic Dynamics.
    12. Chiu Yu Ko & Xuyao Zhang, 2020. "Research joint venture with technology transfer," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(1), pages 341-358, February.
    13. Kaz Miyagiwa & Aminata Sissoko, 2013. "The free-rider problem and the optimal duration of research joint ventures: theory and evidence from the Eureka program," Working Papers 1302, Florida International University, Department of Economics.

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    More about this item

    Keywords

    Cooperative R&D Research joint ventures Free entry Uncertain R&D Technology spillovers;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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