 The Allocation of Resources to Cooperative and Noncooperative R&DNo 0403E, Working Papers from University of Ottawa, Department of Economics Abstract: The precompetitive R&D literature has viewed cooperative and noncooperative R&D as substitutes. In this paper a more realistic approach is taken, where both cooperative and noncooperative R&D are performed in parallel. In the first stage firms determine the optimal investments in both types of R&D, and in the second stage they compete in output. It is found that information sharing between cooperating firms contributes not only to cooperative R&D, but also to noncooperative R&D. The two types of R&D reinforce each other. The level of cooperative R&D may be higher or lower than noncooperative R&D. In a Cournot duopoly, the share of cooperative R&D lies between 20% and 80% of total R&D, and this share increases with spillovers and information sharing. It is always optimal to subsidize half the costs of cooperative R&D, while the subsidy to noncooperative R&D is unchanged form the standard model. Consumers prefer intermediate levels of spillovers and information sharing, while firms prefer higher levels of spillovers, which entail lower levels of information sharing. Keywords: R&D; Cooperative R&D; Innovation; R&D subsidies; R&D policy; Spillovers; Information sharing (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ott:wpaper:0403e Access Statistics for this paper More papers in Working Papers from University of Ottawa, Department of Economics Contact information at EDIRC. |
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