To Reveal or Not to Reveal: The Case of Research Joint Ventures with Two-Sided Incomplete Information
University of Utrecht - Utrecht University School of Economics; Centre for Economic Policy Research (CEPR)
CEPR Discussion Paper Series No. 1985
Firms' incentives to form research joint ventures (RJVs) are analyzed in an incomplete information framework when technological know-how is private information. Firms first decide on cooperation and information revelation and then compete for a patent. Provided that spillovers exist in the case of unilateral revelation of know-how, it can be shown that non-cooperation is always an equilibrium. If competition is in a second-price auction with positive minimum R&D requirements this equilibrium is unique for high spillovers. Cooperation can occur for low spillovers. For certain parameters there exists an equilibrium in which only firms with low know-how cooperate.
JEL Classification: D82, L13, O31working papers series
Date posted: April 6, 1999
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