Optimal Allocation of Ownership Rights in Dynamic R&D Alliances

Stephanie Rosenkranz and Patrick Schmitz

No 2698, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We explore the dynamic evolution of property rights regimes in R&D alliances using the incomplete contract approach pioneered by Grossman, Hart and Moore (Hart and Moore, Journal of Political Economy (1990), and Grossman and Hart, Journal of Political Economy (1986)). In contrast to the standard analysis, the productive asset is an excludable public good such as a patent. Moreover, both firms can decide whether to disclose their know-how and invest effort. Know-how that has once been released cannot be concealed later. We characterize different scenarios in which the optimal ownership structure may change over time due to a trade-off between inducing know-how disclosure and ensuring maximum effort.

Keywords: R&d alliances; Property rights; Partnerships; Incomplete contracts (search for similar items in EconPapers)
JEL-codes: L14 L22 O32 (search for similar items in EconPapers)
Date: 2001-02
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Citations: View citations in EconPapers (7)

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