Endogenous Technology Sharing in R&D Intensive Industries

Derek J. Clark and Jan Yngve Sand

No 2009-28, Economics Discussion Papers from Kiel Institute for the World Economy

Abstract: This paper analyses the endogenous formation of technology sharing coalitions with asymmetric firms. Coalition partners produce complementary technology advancements, although each firm determines its R&D investment level non-cooperatively and there is no co-operation in the product market. We show that the equilibrium coalition outcome is either one between the two most efficient firms, or a coalition with all three firms. The two-firm coalition is the preferred outcome of a welfare maximising authority if ex ante marginal cost is sufficiently high, and the three-firm coalition is preferred otherwise. Furthermore, we show that the equilibrium outcomes result in the lowest total R&D investment of all possible outcomes. Aircraft engine manufacturing provides a case study, and indicates the importance of anti-trust issues as an addition to the theory. --

Keywords: R&D; endogenous coalitions; asymmetric firms (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cse, nep-ind, nep-ino, nep-sbm and nep-tid
Date: 2009
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Persistent link: http://EconPapers.repec.org/RePEc:zbw:ifwedp:7592

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