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The Allocation of Resources to Cooperative and Noncooperative R&D

Listed author(s):
  • Gamal Atallah

The precompetitive R&D literature has viewed cooperative and noncooperative R&D as substitutes. In this paper a more realistic approach is taken, where both cooperative and noncooperative R&D are performed in parallel. In the first stage firms determine the optimal investments in both types of R&D, and in the second stage they compete in output. It is found that information sharing between cooperating firms contributes not only to cooperative R&D, but also to noncooperative R&D. The two types of R&D reinforce each other. The level of cooperative R&D may be higher or lower than noncooperative R&D. In a Cournot duopoly, the share of cooperative R&D lies between 20% and 80% of total R&D, and this share increases with spillovers and information sharing. It is always optimal to subsidize half the costs of cooperative R&D, while the subsidy to noncooperative R&D is unchanged form the standard model. Consumers prefer intermediate levels of spillovers and information sharing, while firms prefer higher levels of spillovers, which entail lower levels of information sharing. La littérature sur la R&D préconcurentielle a toujours considéré la coopération et la non-coopération comme des substituts. Dans ce papier, on adopte une approche plus réaliste, où la R&D coopérative et non-coopérative sont effectuées en parallèle. Dans la première étape, les firmes investissent dans les deux types de R&D. Dans la deuxième étape, elles se concurrencent en quantités. Il est démontré que le partage d'information entre les firmes contribue à la R&D non-coopérative, en plus de contribuer à la R&D coopérative. Chaque type de R&D renforce l'autre, impliquant une complémentarité entre les deux. L'investissement en R&D coopérative peut être supérieur ou inférieur à l'investissement en R&D non-coopérative. Dans un duopole de Cournot, la part de la R&D coopérative se situe entre 20% et 80% de la R&D totale, et cette part augmente avec les externalités de recherche et le partage d'information. Il est optimal de subventionner la moitié des coûts de la R&D coopérative, alors que la subvention à la R&D non-coopérative est inchangée par rapport au modèle standard. Les consommateurs préfèrent des niveaux intermédiaires d'externalités de recherche et de partage d'information, alors que les firmes préfèrent des niveaux plus élevés d'externalités, ce qui implique des niveaux très faibles de partage d'information.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2004s-01.

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Length: 21 pages
Date of creation: 01 Jan 2004
Handle: RePEc:cir:cirwor:2004s-01
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  1. Martin, Stephen & Scott, John T., 2000. "The nature of innovation market failure and the design of public support for private innovation," Research Policy, Elsevier, vol. 29(4-5), pages 437-447, April.
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