Research joint ventures and optimal R&D policy with asymmetric information

Bruno Cassiman

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: When to allow Research Joint Ventures (RJVs) or not is an important instrument in the development of an optimal R&D policy. The regulator, however, is unlikely to know all the relevant information to regulate R&D optimally. The extent to which there exist appropriability problems between the firms is one such variable that is private information to the firms in the industry. In a duopoly setting we analyze the characteristics of a second-best R&D policy where the government can either allow RJVs or not and give lump-sum subsidies to the parties involved. The second-best R&D policy without subsidies will either block some welfare improving RJVs or allow some welfare reducing ones. With lump-sum subsidies, the second-best policy trades off the expected subsidy cost with allowing welfare decreasing RJVs or blocking welfare increasing ones.

Keywords: Research joint ventures; R&D policy; asymmetric information; revelation mechanism (search for similar items in EconPapers)
JEL-codes: D82 L13 L50 O32 (search for similar items in EconPapers)
Date: 1994-10, Revised 1997-12
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Related works:
Journal Article: Research joint ventures and optimal R&D policy with asymmetric information (2000)
Working Paper: Research Joint Ventures and Optimal R&D Policy with Asymmetric Information (1994)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:263

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