Research and Development Cooperation Between Rivals: A Novel Motive beyond New Knowledge

Le Duc Niem ()
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Le Duc Niem: Department of Economics, Tay Nguyen University, Daklak, Vietnam

No 174, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: The paper examines a motive for R&D cooperation with a rival by considering the behavior of a quality follower in a model of vertically differentiated products. We show that, in some settings, a quality follower has an incentive to contribute money to R&D activity of a quality leader with the sole purpose of making the leader's products even better. The reason behind this motivation is that the leader's product quality is serving as an upper-constraint in the decision process of the follower regarding product quality selection. Thus, if the leader's product quality is raised both firms will be better off.

Keywords: product quality; R&D cooperation; knowledge; motive (search for similar items in EconPapers)
JEL-codes: O31 O32 O33 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:dpc:wpaper:0614

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