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The free-rider problem and the optimal duration of research joint ventures: theory and evidence from the Eureka program

Kaz Miyagiwa, Amy Sissoko and Huasheng Song

No 2015-02, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: In a research joint venture (RJV), members' contributions consist mostly of personnel and proprietary technical know-how. Since the quantity and quality of such contributions are difficult to verify, each member has the temptation to free-ride on others' contributions. In this paper we show that a RJV can resolve this free-rider problem by pre-committing to its duration. Our model predicts, among others, that a RJV chasing a higher-cost innovation tends to have a shorter duration. We then utilize data from the European Eureka program to investigate the factors determining the durations of Eureka RJVs. We find the Eureka data consonant with the prediction of our model.

Keywords: Research joint venture (RJV); Free-rider problem; Unobservable R&D; Collusion; Stability of RJVs (search for similar items in EconPapers)
JEL-codes: D82 L1 L2 (search for similar items in EconPapers)
Pages: 31 p.
Date: 2015-05
New Economics Papers: this item is included in nep-ino and nep-ppm
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http://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/27218/070_hiasDP15-02.pdf

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