Research Joint Ventures, Optimal Licensing, and R&D Subsidy Policy
19 Pages Posted: 31 Aug 2006
Date Written: August 2006
Abstract
We reconsider the justifications of R&D subsidies by Spencer and Brander (1983) and others by allowing firms to pool R&D investments and license innovations. In equilibrium R&D joint ventures are formed and licensing occurs in a way that eliminates the strategic benefits of R&D investment in the subsequent oligopoly game. Nevertheless, governments subsidize their domestic firms in order to raise their bargaining position in the joint venture. This holds true regardless of whether governments offer either unconditional or conditional subsidies. This suggests an alternative explanation of the observed proliferation of R&D subsidies.
Keywords: Patent licensing, industrial organization, R&D subsidies, research joint ventures
JEL Classification: L13, O34
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Sensitivity of Strategic and Corrective R&D Policy in Oligopolistic Industries
By Kyle Bagwell and Robert W. Staiger
-
Robust Rules for Industrial Policy in Open Economies
By Dermot Leahy and J. Peter Neary
-
Free Trade vs. Strategic Trade: A Peek into Pandora's Box
By Gene M. Grossman and Giovanni Maggi
-
Symmetrical Research Joint Ventures: Cooperative Substitutes and Complements
By Dermot Leahy and J. Peter Neary
-
R&D Policies, Trade and Process Innovation
By Jan I. Haaland and Hans Jarle Kind
-
By Dermot Leahy and J. Peter Neary
-
Cooperative and Non-Cooperative R&D Policy in an Economic Union
By Jan I. Haaland and Hans Jarle Kind
-
Product Differentiation and Endogenous Mode of Competition
By Michele Polo and Massimo Motta
-
By Delia Ionascu and Krešimir Žigić
-
Strategic Trade Policy with Endogenous Product Differentiation