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Optimal Regulation of Cooperative R&D Under Incomplete Information

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  • Isabelle Brocas

Abstract

A regulator offers a cooperation contract to two firms to develop a research project. The contract provides incentives to encourage skill‐sharing and coordinate subsequent efforts. Innovators must get informational rents to disclose their privately known skills, which results in distorting R&D efforts with respect to the first‐best level. When efforts are strategic complements, both efforts are distorted downwards. By contrast, when efforts are strategic substitutes, the effort of the firm with most valuable skills is distorted downwards (to decrease rents) and the effort of the other firm is distorted upwards (to compensate the previous efficiency loss).

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  • Isabelle Brocas, 2004. "Optimal Regulation of Cooperative R&D Under Incomplete Information," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 81-120, March.
    • Handle: RePEc:bla:jindec:v:52:y:2004:i:1:p:81-120
    DOI: 10.1111/j.0022-1821.2004.00217.x
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    References listed on IDEAS

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    Cited by:

    1. Chiara Conti & Marco A. Marini, 2019. "Are you the right partner? R&D agreement as a screening device," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 28(3), pages 243-264, April.
    2. Niedermayer, Andras & Wu, Jianjun, 2013. "Breaking Up a Research Consortium," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 433, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    3. Emanuele Bacchiega & Paolo Garella, 2006. "Disclosing vs. Withholding Technology Knowledge in a Duopoly," Working Papers 0609, University of Crete, Department of Economics.
    4. Niedermayer, Andras & Wu, Jianjun, 2013. "Breaking up a research consortium," International Journal of Industrial Organization, Elsevier, vol. 31(4), pages 342-353.
    5. Eran Binenbaum, 2005. "Towards a Relational Economics: Methodological Comments on Intellectual Property Strategy, Industrial Organisation, and Economics," Method and Hist of Econ Thought 0502001, University Library of Munich, Germany.
    6. Emanuele Bacchiega & Paolo G. Garella, 2008. "Disclosing Versus Withholding Technology Knowledge In A Duopoly," Manchester School, University of Manchester, vol. 76(1), pages 88-103, January.
    7. Chiara CONTI, 2013. "Asymmetric information in a duopoly with spillovers: new findings on the effects of RJVs," Departmental Working Papers 2013-04, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    8. Eran Binenbaum, 2005. "Towards a Relational Economics," School of Economics and Public Policy Working Papers 2005-04, University of Adelaide, School of Economics and Public Policy.
    9. Rittwik Chatterjee & Srobonti Chattopadhyay, 2015. "Collaborative Research and Rate of Interests," Studies in Microeconomics, , vol. 3(2), pages 140-157, December.
    10. Chatterjee, Rittwik & Chattopadhyay, Srobonti, 2015. "Collaborative Research and Rate of Interests," MPRA Paper 62114, University Library of Munich, Germany.

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