Optimal R&D outsourcing

Patrick L. Leoni

International Journal of Economic Theory, 2018, vol. 14, issue 2, 201-205

Abstract: We study optimal contracts when R&D is outsourced to another company. We find that, when a realistic assumption holds, the optimal contract always leads in equilibrium to low chances of having a successful technical innovation, given announced compensations. This assumption is significantly different from those used in the literature, and it is necessary for the result to hold. Our work shows that R&D outsourcing typically performs poorly.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:14:y:2018:i:2:p:201-205

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