Cooperative vs. non-cooperative R&D incentives under incomplete information

Kabiraj, Tarun and Chattopadhyay, Srobonti (2014): Cooperative vs. non-cooperative R&D incentives under incomplete information.

Abstract

This paper studies incentives for cooperative research vis-à-vis non-cooperative research in an incomplete information framework. We show that with quantity competition under asymmetric information, the expected payoff from non-cooperative research goes down compared to the case of symmetric information; hence RJV incentives of the firms are larger under asymmetric information. In either case, however, the larger is the size of the cost-reducing innovation the lower is the incentive for cooperative research. Finally in our model, incomplete information does not affect the consumers’ welfare, but the firms become worse off.

• Item Type: MPRA Paper
• Language: English
• Keywords: Cooperative R&D, non-cooperative R&D, RJV, incomplete information, consumers’ welfare.
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives

References

Choi, J.P. (1992), “Cooperative R&D with moral hazard”, Economics Letters 39, 485-491.

Choi, J.P. (1993), “Cooperative R&D with product market competition”, International Journal of Industrial Organization 11, 553-571.

Combs, K.L. (1992), “Cost sharing vs. multiple research projects in cooperative R&D”, Economics Letters 39, 353-357.

D’Aspremont, C. and A. Jacquemin (1988), “Cooperative and non-cooperative R&D in duopoly with spillovers”, American Economic Review 5, 1133-37.

Das Varma, G. (2003) Bidding for a Process Innovation Under Alternative Modes of Competition, International Journal of Industrial Organization, 21, 15-37.

DeCourcy, J. (2005), “Corporate R&D and strategic trade policy”, Canadian Journal of Economics 38, 546-573.

Kabiraj, T. (2007), “On the incentives for cooperative research”, Research in Economics 61, 17-23.

Kabiraj, T. (2006), “On the incentives for cooperative and non-cooperative R&D in duopoly”, Arthaniti (New Series) 5, 24-33.

Kabiraj, T. and A. Mukherjee (2000), “Cooperation in R&D and production --- A three-firm analysis”, Journal of Economics 71, 281-304.

Marjit, S. (1991), “Incentives for cooperative and non-cooperative R and D in duopoly”, Economics Letters 37, 187-191.

Motta, M. (1992), “Cooperative R&D and vertical product differentiation”, International Journal of Industrial Organization 10, 643–661.

Mukherjee, A and S. Marjit (2004), “R&D organization and technology transfer”, Group Decision and Negotiation 13, .243-258.

Mukherjee, A. and A. Ray (2007), “Patents, imitation and welfare”, Economics of Innovation and New Technology 16, 227-236.

Mukherjee, A. and A. Ray (2009), “Unsuccessful patent application and cooperative R&D”, Journal of Economics 97, 251-263.

Mukherjee, A. and A. Ray (2014), “Entry, profit and welfare under asymmetric R&D costs”, the Manchester School 82, 284-195.

Silipo, D.B. (2008), “Incentives and forms of cooperation in research and development”, Research in Economics 62, 101-119.

Silipo, D.B. and A. Weiss (2005), “Cooperation and competition in an R&D market with spillovers”, Research in Economics 59, 41-57.

Suzumura, K. (1992), “Cooperative and non-cooperative R&D in an oligopoly with spillovers”, American Economic Review 82, 1307-20.

Vonortas, N (1997), “Research joint ventures in the U.S.”, Research Policy 26, 577-595.