Competitive and Harmonised R&D Policies for International R&D Alliances Involving Asymmetric Firms
University of Nottingham Research Paper No. 2012/03
37 Pages Posted: 28 Mar 2012
Date Written: March 28, 2012
We examine research and development (R&D) policies when a national firm forms an R&D alliance with a foreign competitor. Firms differ in their R&D capabilities, and adopt a profit-sharing rule when R&D decisions are coordinated. National R&D tax/subsidy policies are set independently or harmonized. When firms coordinate their R&D decisions and governments choose R&D policies independently, R&D taxes are chosen. But there is no intervention if policies are harmonized. These policy outcomes affect the types of R&D alliance choosen. Agreements to share R&D information may be preferred to those combining coordination of R&D decisions and information sharing because of the R&D tax that coordination attracts.
Keywords: R&D efficiency, asymmetric R&D alliance, cost-reducing R&D, R&D policy, cooperative R&D agreement
JEL Classification: F13, O32, O38, L13, D43
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