Cooperative R&D for a New Product under Convex Production Costs

Arijit Mukherjee

Journal of Institutional and Theoretical Economics (JITE), 2024, vol. 180, issue 3, 401-424

Abstract: In a duopoly with a stochastic non-tournament R&D process for a new product, we show that firms may prefer cooperative R&D under convex production costs even if there is no knowledge spillover, thus, providing a new reason for cooperative R&D. Cooperative R&D may increase expected consumer surplus and expected welfare compared to non-cooperative R&D. Convex production costs create the incentive for technology licensing ex post R&D. In the presence of licensing ex post R&D, firms prefer joint profit-maximising R&D with the option for licensing ex post R&D, while consumers and society may prefer cooperative R&D. Our analysis provides some implications for vaccine research.

Keywords: cooperative R&D; non-cooperative R&D; technology licensing; welfare (search for similar items in EconPapers)
JEL-codes: D43 L13 L24 O31 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1628/jite-2024-0001

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