Cooperative and non-cooperative R&D with spillovers under consumer-friendly firms

Quan Dong, Juan Bárcena-Ruiz and Amagoia Sagasta

Economics of Innovation and New Technology, 2023, vol. 32, issue 5, 603-621

Abstract: Given that there is ample evidence that firms have social concerns, in this paper, we analyse their influence on firms’ R&D cooperation with spillovers. We find that social concerns encourage firms to invest more in R&D when they do not cooperate than when they do. Moreover, when the social concern is great enough firms invest more under non-cooperative R&D independently of the spillover value. We also find that firms may prefer not to cooperate on R&D, which does not happen when they do not care about social concerns. Regarding the preference of the government, cooperative R&D agreements generate greater social welfare than non-cooperative R&D in two cases: if the spillover is high enough and the concern of firms about social issues is low enough, and if firms care enough about social issues. Finally, under non-cooperative R&D firms may invest more than the socially efficient level.

Date: 2023
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DOI: 10.1080/10438599.2021.1981305

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