Cooperation or competition in R&D when innovation and absorption are costly

Lars Wiethaus

Economics of Innovation and New Technology, 2006, vol. 15, issue 6, 569-589

Abstract: This article analyzes cost-reducing R&D investments by firms that behave non-cooperatively or cooperatively. Firms face a trade-off between allocating their R&D investments to innovate or to imitate (absorb). We find that the non-cooperative behavior not only induces more imitation (absorption) but also, for the most part, more innovation investments. Only the cooperative behavior, however, ensures that R&D investments are allocated efficiently to innovation and to imitation (absorption) in the sense that any given amount of industry-wide cost reduction is obtained for the minimum overall R&D costs.

Keywords: Absorptive capacity; Cooperation; Spillovers; Innovation; Imitation; R&D (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (2)

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DOI: 10.1080/10438590500268272

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