Munich Personal RePEc Archive

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.

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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.

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