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Partner Selection in R&D Cooperation

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  • Gamal Atallah

Abstract

In this paper we extend the R&D cooperation model to asymmetric firms, focusing on the incentives for cooperating with firms characterized by different levels of efficiency. Three firms differentiated by their cost levels invest in cost-reducing R&D before competing in output. Firms may cooperate in R&D, which implies both R&D coordination and perfect information sharing. It is found that firms' preferences over whom to cooperate with depend on spillovers and on cost differences between firms. With low (high) spillovers, a firm prefers to cooperate with the most (least) efficient among the remaining firms. As the cost differential between firms increases, efficient (inefficient) firms prefer to cooperate with the most (least) efficient firm more often. For very high spillovers, a firm prefers to be excluded from R&D cooperation. The equilibrium configuration is that the most efficient firms cooperate for low spillovers, while all firms cooperate for intermediate spillovers. For high spillovers, the equilibrium is for all firms to cooperate when the cost differential is sufficiently low, but depends on the bargaining mechanism when the cost differential is high. The model constitutes a generalization of the standard R&D model with symmetric firms. Ce papier analyse les incitations à la coopération technologique entre des firmes différenciées par leur niveau d'efficacité. Trois firmes dotées de coûts de production différents investissent dans la R&D visant à réduire leurs coûts de production, avant de se concurrencer en quantités. Les firmes peuvent coopérer en R&D, ce qui implique la coordination des investissements en R&D et le partage d'information. Il est démontré que les préférences quant au choix du partenaire dépendent des externalités de recherche et du différentiel de coûts. Lorsque les externalités de recherche sont faibles (élevées), une firme préfère coopérer avec le partenaire le plus (moins) efficace qui est disponible. À mesure que le différentiel de coûts augmente, les firmes efficaces (inefficaces) préfèrent coopérer avec les partenaires les plus (moins) efficaces plus souvent. Pour des niveaux d'externalités très élevés, une firme préfère être exclue de la coopération en R&D. La configuration d'équilibre est que les firmes les plus efficaces coopèrent lorsque les externalités sont faibles, alors que toutes les firmes coopèrent pour des niveaux intermédiaires des externalités. Lorsque les externalités sont élevées, l'équilibre est que toutes les firmes coopèrent lorsque le différentiel de coûts est suffisamment faible, mais dépend de la structure de négociation lorsque ce différentiel est élevé. Le modèle constitue une généralisation du modèle de concurrence en R&D avec des firmes symétriques.

Suggested Citation

  • Gamal Atallah, 2005. "Partner Selection in R&D Cooperation," CIRANO Working Papers 2005s-24, CIRANO.
  • Handle: RePEc:cir:cirwor:2005s-24
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    References listed on IDEAS

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    Cited by:

    1. Chiara Conti & Marco A. Marini, 2017. "Are You the Right Partner ? R&D Agreement as a Screening Device," DIAG Technical Reports 2017-09, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    2. repec:ebl:ecbull:v:12:y:2005:i:18:p:1-11 is not listed on IDEAS
    3. Gamal Atallah, 2005. "Research Joint Ventures Cartelization with Asymmetric R&D Spillovers," Economics Bulletin, AccessEcon, vol. 12(18), pages 1-11.

    More about this item

    Keywords

    asymmetric firms; R&D cooperation; R&D spillovers; research joint ventures; coopération en R&D; consortiums de recherche; firmes asymétriques; externalités de recherche;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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