The hidden costs of R&D collaboration

Sara Amoroso

No 2014-02, JRC Working Papers on Corporate R&D and Innovation from Joint Research Centre

Abstract: The paper investigates the barriers to collaboration in terms of hidden transaction costs, by deriving the distribution of the operating costs and sunk costs associated with firms investment choices in R&D and innovation activities with or without a research partner. To retrieve both fixed and sunk costs of R&D and innovation activities with or without a research partner, we develop and estimate a structural dynamic monopoly model to quantify the linkages between R&D spending, innovation and cooperation investment choices, and endogenous productivity. We find that the sunk costs of innovations are smaller when collaborating with a research partner; the probability to spend in R&D or to innovate increases with the level of productivity, when collaborating in R&D and innovation; finally, we find that the sunk costs of innovation are 1.5 to 3 times smaller than the sunk costs of R&D. Additionally, the suggested structural framework of firm heterogeneity in cost functions offers a straightforward extension to policy impact evaluation.

Keywords: R&D cooperation; transaction costs; dynamic structural model. (search for similar items in EconPapers)
JEL-codes: D22 D23 L14 L60 O32 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014
New Economics Papers: this item is included in nep-cse, nep-ind, nep-ino, nep-knm, nep-ppm, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ipt:wpaper:201402

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