Incentives and Forms of Cooperation in Research and Development

42 Pages Posted: 17 Dec 2007

Date Written: March 2007

Abstract

The paper surveys the main forces affecting the incentive to cooperate in R&D and the effects of cooperation on the incentive to innovate. We consider both a complete and an incomplete contract framework. In addition, we consider several forms of cooperative agreements, and we study in what circumstances one type of cooperation is more likely to emerge more than others.

The results suggest that two main forces affecting the incentive to cooperate in R&D are uncertainty and spillovers on R&D activity. In addition, the incentive to cooperate among symmetric firms may be lower or higher than among asymmetric firms, depending on the source of asymmetry.

When firms cooperate, in most cases they prefer an RJV to other forms of cooperative agreements. However, due to transaction costs, moral hazard and adverse selection problems in the formation of the venture, other forms of cooperation or competition in R&D may occur.

In addition, we consider the effects of uncertainty and spillovers on the size and structure of the coalitions, and the effects of competing research joint ventures on the incentive to innovate.

Finally, empirical evidence is surveyed, and the consistence of the latter with the theoretical conclusions is discussed.

Keywords: Cooperation and competition in R&D, Research joint ventures, Cross-licensing agreements, Spillovers in R&D

JEL Classification: D21,C71,C72

Suggested Citation

Silipo, Damiano Bruno, Incentives and Forms of Cooperation in Research and Development (March 2007). Available at SSRN: https://ssrn.com/abstract=1071967 or http://dx.doi.org/10.2139/ssrn.1071967

Damiano Bruno Silipo (Contact Author)

University of Calabria ( email )

Dipartimento di Economia Politica
87036 Arcavacata di Rende CS
Italy

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