Cooperative and Non-Cooperative R&D with Spillovers: The Case of Labor-Managed Firms
Posted: 17 Dec 2007 Last revised: 19 Apr 2016
Date Written: 2007
This research focuses on the behavior of not-for-profit enterprises. In particular, using a familiar model of cost-reducing R&D with spillovers, we examine strategic interactions between labor-managed firms in a duopoly. Research spillovers have not been previously considered in the context of labor-managed firms. Among four market scenarios involving competition in research and production; cooperation in research and production and competition or cooperation in research and the reverse in production, our results show that research is greatest under full cooperation, while output is greatest under full competition. Output and R&D are the lowest in the case when firms compete in research, but form a production cartel. The degree of research spillovers has a crucial bearing upon these rankings. Some of these results differ from those for profit-maximizing firms. The effects of changes in research spillovers on employment (output) are shown to depend upon the nature of the underlying production technology. Policy implications are discussed.
Keywords: Cooperative R&D, Noncooperative R&D, Research spillovers, Labor-managed firms, Profit-maximizing firms
JEL Classification: O3, L3, J5
Suggested Citation: Suggested Citation