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Cooperating firms in inventive and absorptive research

Author

Listed:
  • Ben Youssef, Slim
  • Breton, Michèle
  • Zaccour, Georges

Abstract

We consider a duopoly competing in quantity, where firms can invest in both innovative and absorptive R&D to reduce their unit production cost, and where they benefit from free R&D spillovers between them. We analyze the case where firms act non cooperatively and the case where they cooperate by forming a research joint venture. We show that, in both modes of play, there exists a unique symmetric solution. We find that the investment in innovative R&D is always higher than in absorptive R&D. We also find that the value of the learning parameter has almost no impact on innovative R&D, firms profits, consumer's surplus and social welfare. Finally, differences in investment in absorptive research and social welfare under the two regimes are in opposite directions according to the importance of the free spillover.

Suggested Citation

  • Ben Youssef, Slim & Breton, Michèle & Zaccour, Georges, 2011. "Cooperating firms in inventive and absorptive research," MPRA Paper 35326, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:35326
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    File URL: https://mpra.ub.uni-muenchen.de/35326/1/MPRA_paper_35326.pdf
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    References listed on IDEAS

    as
    1. Leahy, Dermot & Neary, J. Peter, 2007. "Absorptive capacity, R&D spillovers, and public policy," International Journal of Industrial Organization, Elsevier, vol. 25(5), pages 1089-1108, October.
    2. Joanna Poyago-Theotoky, 1999. "A Note on Endogenous Spillovers in a Non-Tournament R & D Duopoly," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 15(3), pages 253-262, November.
    3. Kamien, Morton I. & Zang, Israel, 2000. "Meet me halfway: research joint ventures and absorptive capacity," International Journal of Industrial Organization, Elsevier, vol. 18(7), pages 995-1012, October.
    4. Vesa Kanniainen & Rune Stenbacka, 2000. "Endogenous Imitation and Implications for Technology Policy," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 156(2), pages 360-360, June.
    5. Rabah Amir & John Wooders, 1998. "Cooperation vs. competition in R&D: The role of stability of equilibrium," Journal of Economics, Springer, vol. 67(1), pages 63-73, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Innovative R&D; Absorptive R&D; Learning Parameter; Spillover; Research Joint Venture;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • 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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