The strategic timing of R&D agreements

Marco Marini, Maria Luisa Petit and Roberta Sestini

No 1104, Working Papers from University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini

Abstract: We present a model of endogenous formation of R&D agreements among firms in which also the timing of R&D investment is made endogenous. The purpose is to bridge two usually separate streams of literature, the noncooperative formation of R&D alliances and the endogenous timing literature. Our approach allows to consider the formation of R&D agreements over time. It is shown that, when both R&D spillovers and investment costs are sufficiently low, firms may find difficult to maintain a stable R&D agreement due to the strong incentive to invest noncooperatively as leaders. In such a case, to be stable a R&D agreement requires that the joint investment occurs at the initial stage, avoiding any delay. When instead R&D spillover rates are sufficiently high, the cooperation in R&D constitutes a profitable option, although firms also possess the incentive to sequence their investment over time. Finally, when spillovers are asymmetric and the knowledge leaks mainly from the leader to the follower, to invest as follower becomes extremely profitable, making R&D alliances hard to sustain unless firms strategically delay their joint investment in R&D.

Keywords: R&D investment; Spillovers; Endogenous Timing. (search for similar items in EconPapers)
JEL-codes: C72 D43 L11 L13 O30 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2011, Revised 2011
New Economics Papers: this item is included in nep-com, nep-cse, nep-ino, nep-ipr, nep-pr~, nep-sbm and nep-tid
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Citations: View citations in EconPapers (2)

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http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_11_04.pdf First version, 2011 (application/pdf)

Related works:
Journal Article: Strategic timing in R&D agreements (2014)
Working Paper: Strategic Timing in R&D Agreements (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:urb:wpaper:11_04

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