Project Choice and Risk in R&D

Heiko Gerlach, Thomas Rønde and Konrad Stahl
Additional contact information
Thomas Rønde: Institute of Economics, University of Copenhagen
Konrad Stahl: University of Mannheim

No 2004-01, CIE Discussion Papers from University of Copenhagen. Department of Economics. Centre for Industrial Economics

Abstract: We introduce stochastic R&D in the Hotelling model and show that if the technical risk is sufficiently high, all firms focus on the most valuable market segment. We then endogenize technical risk by allowing firms to choose between a safe and a risky R&D technology. In equilibrium, firms either both target the most attractive market with at least one firm using the risky technology or they choose different niche projects and both apply the safe R&D technology. We show that R&D spillovers lead to more differentiated R&D projects and patent protection to less. Project coordination within a RJV implies more differentiation, and may be welfare-improving.

Keywords: technical risk; R&D project choice; technological spillovers; research joint ventures (search for similar items in EconPapers)
JEL-codes: D81 L13 O32 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2004-01
New Economics Papers: this item is included in nep-ino and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.econ.ku.dk/cie/dp/dp_2003-2006/2004-01.pdf/ (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.econ.ku.dk/cie/dp/dp_2003-2006/2004-01.pdf/ [301 Moved Permanently]--> https://www.econ.ku.dk/cie/dp/dp_2003-2006/2004-01.pdf/)

Related works:
Journal Article: PROJECT CHOICE AND RISK IN R&D* (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kud:kuieci:2004-01

Access Statistics for this paper

More papers in CIE Discussion Papers from University of Copenhagen. Department of Economics. Centre for Industrial Economics �ster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().