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Research Joint Ventures And Product Innovation: Some Welfare Aspects

Joanna Poyago-Theotoky

Economics of Innovation and New Technology, 1997, vol. 5, issue 1, 51-73

Abstract: This paper considers a model of horizontal and vertical product differentiation. Firms spending on R&D may improve the quality of their product. K&D cooperation in the fort11 of a RJV among a subset of innovating firms introduces the possibility of a much better product being produced relative to the case of non-cooperation in K&D. Given Bertrand competition in the product market the RJV sets a common price for the improved good. It is shown that. even under this extreme form of cooperation, there are clear instances where social welfare is enhanced relative to the non-cooperative outcome.

Keywords: Product innovation; horizontal and vertical differentiation; R&D cooperation; welfare comparison; J.E.L. Class. Nos.: 030; D43; L13 (search for similar items in EconPapers)
Date: 1997
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