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On Moral Hazard and Joint R&D

Author

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  • Simona Fabrizi

    () (Keele University, Centre for Economic Research and School of Economic and Management Studies)

  • Steffen Lippert

    () (Department of Commerce, Albany Campus, Massey University)

Abstract

This paper analyzes how the determinants of two entrepreneurs’ choice whether to conduct product innovation R&D projects alone, or in a cross license agreement, or in a research joint venture depend on the intrinsic nature of the R&D projects. Results show that in fundamental research -- which is considered to be affected by moral hazard behavior of the researchers -- there is a systematic bias toward conducting R&D projects alone and against making use of synergies in an RJV. Furthermore, from a social standpoint, in non-fundamental research -- which is considered not to be affected by moral hazard behavior of the researchers -- too few RJVs and too few cross license agreements are chosen; whereas in fundamental research too few RJVs, and too many cross license agreements are chosen.

Suggested Citation

  • Simona Fabrizi & Steffen Lippert, 2007. "On Moral Hazard and Joint R&D," Keele Economics Research Papers KERP 2007/03, Centre for Economic Research, Keele University.
  • Handle: RePEc:kee:kerpuk:2007/03
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    File URL: http://www.keele.ac.uk/depts/ec/wpapers/kerp0703.pdf
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    Cited by:

    1. Simona Fabrizi & Steffen Lippert, 2012. "Due Diligence, Research Joint Ventures, and Incentives to Innovate," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(4), pages 588-611, December.
    2. Naoto Aoyama & Emilson C.D. Silva, 2017. "Asymmetric Innovation Agreements under Environmental Regulation," CESifo Working Paper Series 6782, CESifo Group Munich.
    3. Marco Marinucci, 2012. "A primer on R&D cooperation among firms," Questioni di Economia e Finanza (Occasional Papers) 130, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    Monetary policy; zone of discretion; intermediate inflation target.;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • 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

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