IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/117623.html

Cooperative vs. Non-cooperative R&D under Uncertain Probability of Success

Author

Listed:
  • Chatterjee, Rittwik
  • Kabiraj, Tarun

Abstract

R&D decision of a firm involves various sources of incomplete information. The present paper introduces incomplete information about the success probability of R&D in a model of two firms interacting in R&D and production and discusses the choice between cooperative and non-cooperative research. We consider research joint venture as the form of R&D cooperation. While the choice depends on the constellation of parameters, the following results are derived, in general. First, the high type firm always has a larger incentive for both cooperative and non-cooperative R&D compared to the low type firm. Second, if the low type firm goes for non-cooperative research, then the high type firm must go for the same, and if the high type firm prefers cooperative research, the low type firm must also prefer cooperative R&D. However, if the high type firm prefers non-cooperative R&D, the low type firm may go for either form of research depending on the parameters. The paper derives conditions, in particular, for the case when the high type firm prefers non-cooperative research whereas the low type firm prefers cooperative research.

Suggested Citation

  • Chatterjee, Rittwik & Kabiraj, Tarun, 2023. "Cooperative vs. Non-cooperative R&D under Uncertain Probability of Success," MPRA Paper 117623, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:117623
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/117623/1/Kabiraj_Coop%20vs%20Non-coop%20R%26D%20under%20uncertain%20success%20probability_14%20June%202023.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. d'Aspremont, Claude & Jacquemin, Alexis, 1990. "Cooperative and Noncooperative R&D in Duopoly with Spillovers: Erratum," American Economic Review, American Economic Association, vol. 80(3), pages 641-642, June.
    2. Combs, K. L., 1992. "Cost sharing vs. multiple research projects in cooperative R&D," Economics Letters, Elsevier, vol. 39(3), pages 353-357, July.
    3. Tarun Kabiraj & Soma Roy, 2004. "Demand Shift Effect of R&D and the R&D Organization," Journal of Economics, Springer, vol. 83(2), pages 181-198, November.
    4. Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, vol. 82(5), pages 1307-1320, December.
    5. Choi, Jay Pil, 1992. "Cooperative R&D with moral hazard," Economics Letters, Elsevier, vol. 39(4), pages 485-491, August.
    6. Tarun Kabiraj & Srobonti Chattopadhyay, 2015. "Cooperative vs. non-cooperative R&D incentives under incomplete information," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 24(6), pages 624-632, September.
    7. Grossman, Gene M & Shapiro, Carl, 1986. "Research Joint Ventures: An Antitrust Analysis," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(2), pages 315-337, Fall.
    8. Amir, Rabah & Evstigneev, Igor & Wooders, John, 2003. "Noncooperative versus cooperative R&D with endogenous spillover rates," Games and Economic Behavior, Elsevier, vol. 42(2), pages 183-207, February.
    9. Abhishek Kabiraj, 2018. "R&D cooperation in a three-firm Cournot industry," Economics Bulletin, AccessEcon, vol. 38(3), pages 1541-1546.
    10. Arijit Mukherjee & Sugata Marjit, 2004. "R&D organization and technology transfer," Group Decision and Negotiation, Springer, vol. 13(3), pages 243-258, May.
    11. Motta, Massimo, 1992. "Cooperative R&D and vertical product differentiation," International Journal of Industrial Organization, Elsevier, vol. 10(4), pages 643-661, December.
    12. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-1306, December.
    13. Arijit Mukherjee & Achintya Ray, 2009. "Unsuccessful patent application and cooperative R&D," Journal of Economics, Springer, vol. 97(3), pages 251-263, July.
    14. Kabiraj, Tarun, 2007. "On the incentives for cooperative research," Research in Economics, Elsevier, vol. 61(1), pages 17-23, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kabiraj, Abhishek & Kabiraj, Tarun, 2019. "Uncertain R&D Outcomes and Cooperation in R&D," MPRA Paper 94676, University Library of Munich, Germany.
    2. Kabiraj, Abhishek & Kabiraj, Tarun, 2018. "On the Choice of R&D Organization," MPRA Paper 87503, University Library of Munich, Germany.
    3. Kabiraj, Tarun & Chattopadhyay, Srobonti, 2014. "Cooperative vs. non-cooperative R&D incentives under incomplete information," MPRA Paper 59259, University Library of Munich, Germany.
    4. Srobonti Chattopadhyay & Tarun Kabiraj, 2015. "Incomplete information and R&D organization," Economics Bulletin, AccessEcon, vol. 35(1), pages 14-20.
    5. Abhishek Kabiraj, 2018. "R&D cooperation in a three-firm Cournot industry," Economics Bulletin, AccessEcon, vol. 38(3), pages 1541-1546.
    6. Silipo, Damiano B., 2008. "Incentives and forms of cooperation in research and development," Research in Economics, Elsevier, vol. 62(2), pages 101-119, June.
    7. Rittwik Chatterjee & Tarun Kabiraj, 2024. "Cooperative vs. non-cooperative R&D under uncertain probability of success," Indian Economic Review, Springer, vol. 59(1), pages 87-103, June.
    8. Silipo, Damiano Bruno & Weiss, Avi, 2005. "Cooperation and competition in an R&D market with spillovers," Research in Economics, Elsevier, vol. 59(1), pages 41-57, March.
    9. Erkal, Nisvan & Piccinin, Daniel, 2010. "Cooperative R&D under uncertainty with free entry," International Journal of Industrial Organization, Elsevier, vol. 28(1), pages 74-85, January.
    10. De Fraja, Gianni & Silipo, Damiano Bruno, 2002. "Product market competition, R&D, and welfare," Research in Economics, Elsevier, vol. 56(4), pages 381-397, December.
    11. Rittwik Chatterjee & Srobonti Chattopadhyay, 2015. "Collaborative Research and Rate of Interests," Studies in Microeconomics, , vol. 3(2), pages 140-157, December.
    12. Chatterjee, Rittwik & Chattopadhyay, Srobonti, 2015. "Collaborative Research and Rate of Interests," MPRA Paper 62114, University Library of Munich, Germany.
    13. Buccella, Domenico & Fanti, Luciano & Gori, Luca, 2021. "A contribution to the theory of R&D investments," GLO Discussion Paper Series 940, Global Labor Organization (GLO).
    14. Brunner, Philipp & Letina, Igor & Schmutzler, Armin, 2024. "Research joint ventures: The role of financial constraints," European Economic Review, Elsevier, vol. 165(C).
    15. Ángel L. López & Xavier Vives, 2019. "Overlapping Ownership, R&D Spillovers, and Antitrust Policy," Journal of Political Economy, University of Chicago Press, vol. 127(5), pages 2394-2437.
    16. Antonio Tesoriere, 2015. "Competing R&D joint ventures in Cournot oligopoly with spillovers," Journal of Economics, Springer, vol. 115(3), pages 231-256, July.
    17. Roma, Paolo & Perrone, Giovanni, 2016. "Cooperation among competitors: A comparison of cost-sharing mechanisms," International Journal of Production Economics, Elsevier, vol. 180(C), pages 172-182.
    18. Samano, Mario & Santugini, Marc & Zaccour, Georges, 2017. "Dynamics in research joint ventures and R&D collaborations," Journal of Economic Dynamics and Control, Elsevier, vol. 77(C), pages 70-92.
    19. Sami Dakhlia & Flavio M. Menezes & Akram Temimi, 2006. "The Role Of R&D Technology In Asymmetric Research Joint Ventures," Manchester School, University of Manchester, vol. 74(1), pages 52-63, January.
    20. Luckraz, Shravan, 2011. "R&D games in a Cournot duopoly with isoelastic demand functions: A comment," Economic Modelling, Elsevier, vol. 28(6), pages 2873-2876.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:117623. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.