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Product R&D Coopetition and Firm Performance

Ramsza Michał () and Karbowski Adam ()
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Ramsza Michał: Department of Mathematics and Mathematical Economics, Warsaw School of Economics, Warsaw, Poland
Karbowski Adam: Department of Business Economics, Warsaw School of Economics, Warsaw, Poland

The B.E. Journal of Theoretical Economics, 2020, vol. 20, issue 2, 9

Abstract: We investigate firms’ behavior in demand-enhancing product R&D. We consider and compare a cooperative and non-cooperative R&D investment setting by firms. In a non-cooperative scenario (R&D competition), firms decide on their R&D investments and outputs unilaterally. In a cooperative scenario (R&D coopetition), firms engage in a bargaining process to reach a binding R&D agreement. Firms through bargaining can reach an R&D agreement which specifies their R&D investment levels. The investment levels under R&D coopetition are higher compared with the investment levels under R&D competition. Firms’ profits are also higher under R&D coopetition compared with R&D competition. We conclude that R&D coopetition can alleviate the individual R&D investment disincentive and work as a strategic instrument that enhances product innovation and firms’ profits.

Keywords: Product R&D; R&D investments; bargaining; firm performance (search for similar items in EconPapers)
Date: 2020
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