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Cooperative R&D and Commitment to A Policy of Know-how Trading

Mário A. P. M. Silva ()
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Mário A. P. M. Silva: Universidade do Porto

International Advances in Economic Research, 2018, vol. 24, issue 2, 123-133

Abstract: Abstract In this paper, we develop a theoretical framework to investigate the impact of adopting a strategy of know-how trading on the degree of research and development (R&D) cooperation. We show that the consequences of cooperation in know-how sharing under the conditions of the model are similar to a policy of cooperation in R&D investments in areas with large spillovers. An industry-wide policy of cooperation among competitors with respect to R&D investment and sharing would simply result in maximal joint profits. This cooperative R&D outcome could be generalized to any degree of spillover other than 100%. In this paper, the commitment to a policy of know-how trading by the participants in an industry is explained by the firm’s attempt to induce the equilibrium of a single industry-wide cooperative research joint venture. In a repeated game framework, we show that pre-commitments by non-cooperative firms to disclose their own know-how to the industry can be effective in inducing cooperative R&D investments by the participants.

Keywords: Cooperative R&D; Repeated games; Know-how trading; Policy; L13; O31; O33 (search for similar items in EconPapers)
Date: 2018
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