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Research and Development Cooperation Between Rivals: A Novel Motive beyond New Knowledge

Author

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  • Le Duc Niem

    (Department of Economics, Tay Nguyen University, Daklak, Vietnam)

Abstract

The paper examines a motive for R&D cooperation with a rival by considering the behavior of a quality follower in a model of vertically differentiated products. We show that, in some settings, a quality follower has an incentive to contribute money to R&D activity of a quality leader with the sole purpose of making the leader's products even better. The reason behind this motivation is that the leader's product quality is serving as an upper-constraint in the decision process of the follower regarding product quality selection. Thus, if the leader's product quality is raised both firms will be better off.

Suggested Citation

  • Le Duc Niem, 2014. "Research and Development Cooperation Between Rivals: A Novel Motive beyond New Knowledge," Working Papers 174, Development and Policies Research Center (DEPOCEN), Vietnam.
    • Handle: RePEc:dpc:wpaper:0614
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    Keywords

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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • 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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