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Cooperation in product development and process R&D between competitors

  • Bourreau, Marc
  • Dogan, PInar

In this paper, we first provide a simple framework for cooperation in product development between competitors. We put forward the trade-off between the benefits obtained through development cost-sharing and the cost of intensified competition due to reduced product differentiation, which implies that no-cooperation can be an equilibrium outcome. We allow for firms to cooperate partially, i.e., to develop some product components jointly, but not necessarily all components. This enables us to study the factors that may have an effect on the degree of cooperation in product development, both in the presence and in the absence of process R&D. We also analyze the interaction between cooperation decisions on product development and process R&D. By considering a direct link between the two, we show that the degree of cooperation in product development may adversely affect the intensity of cooperation in process R&D.

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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 28 (2010)
Issue (Month): 2 (March)
Pages: 176-190

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Handle: RePEc:eee:indorg:v:28:y:2010:i:2:p:176-190
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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  17. Choi, Jay Pil, 1993. "Cooperative R&D with product market competition," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 553-571.
  18. Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, vol. 82(5), pages 1307-20, December.
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