Stability of a Research Joint Venture

M Rossell, Antoine Soubeyran () and Shlomo Weber ()

G.R.E.Q.A.M. from Universite Aix-Marseille III

Abstract: This paper examines the stability of research joint venture when the success of innovative activities is uncertain. While an increase in the likelihood of making a discovery provides firms with an incentive to cooperate, there is a competing incentive to conduct R&D independently. Should the RJV fail to innovate, industry profits are divided among only the successful independent firms. We find that a stable RJV always exists when the industry is large, and that full cooperation of the industry is stable when the likelihood of failure for an industrywide RJV is low.

Keywords: OLIGOPOLIES; RESEARCH (search for similar items in EconPapers)
JEL-codes: O31 O32 L13 (search for similar items in EconPapers)
Date: Written

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