Cooperative and Non-Cooperative R&D with Spillovers: The Case of Labor-Managed Firms

Posted: 17 Dec 2007 Last revised: 19 Apr 2016

See all articles by Rajeev K. Goel

Rajeev K. Goel

Illinois State University - Department of Economics

Shoji Haruna

Okayama University

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

Goel, Rajeev K. and Haruna, Shoji, Cooperative and Non-Cooperative R&D with Spillovers: The Case of Labor-Managed Firms (2007). Economic Systems, Vol. 31, No. 4, pp. 423-440, 2007, Available at SSRN:

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

Shoji Haruna

Okayama University ( email )

1-1-1 Tsushimanaka, Kita Ward
Okayama, 700-0082

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