The Impact of Market Structure and Learning on the Tradeoff between R&D Competition and Cooperation

36 Pages Posted: 26 Mar 2013  

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Date Written: March 2013

Abstract

This paper compares R&D competition and cooperation when firms can devote resources to a ‘safe’ investment or a risky R&D investment. When the discovery of a new product creates positive externalities on non‐discovering firms, equilibrium investment flow, ex ante investment, and welfare under R&D competition are less than or equal to what they are under research cooperation. With negative externalities, R&D cooperation results in the same or lower ex ante investment than under R&D competition, and social welfare may also be less. Our results have relevance for empirical studies of the impact of R&D cooperation on R&D outcomes.

Suggested Citation

Besanko, David and Wu, Jianjun, The Impact of Market Structure and Learning on the Tradeoff between R&D Competition and Cooperation (March 2013). The Journal of Industrial Economics, Vol. 61, Issue 1, pp. 166-201, 2013. Available at SSRN: https://ssrn.com/abstract=2239530 or http://dx.doi.org/10.1111/joie.12010

David A. Besanko (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-7753 (Phone)
847-467-1777 (Fax)

Jianjun Wu

Compass Lexecon ( email )

United States

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