Cooperative vs. non-cooperative R&D incentives under incomplete information

Tarun Kabiraj and Srobonti Chattopadhyay

Economics of Innovation and New Technology, 2015, vol. 24, issue 6, 624-632

Abstract: This paper studies incentives for cooperative research vis-�-vis non-cooperative research in an incomplete information framework. We show that with quantity competition under asymmetric information, the expected payoff from non-cooperative research goes down compared to the case of symmetric information; hence research joint venture incentives of the firms are larger under asymmetric information. In either case, however, the larger is the size of the cost-reducing innovation the lower is the incentive for cooperative research. Finally, in our model, incomplete information does not affect the consumers' welfare, but the firms become worse off.

Date: 2015
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DOI: 10.1080/10438599.2014.991138

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