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Product R&D Coopetition and Firm Performance

Author

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  • Ramsza Michał

    (Department of Mathematics and Mathematical Economics, Warsaw School of Economics, Warsaw, Poland)

  • Karbowski Adam

    (Department of Business Economics, Warsaw School of Economics, Warsaw, Poland)

Abstract

We investigate firms’ behavior in demand-enhancing product R&D. We consider and compare a cooperative and non-cooperative R&D investment setting by firms. In a non-cooperative scenario (R&D competition), firms decide on their R&D investments and outputs unilaterally. In a cooperative scenario (R&D coopetition), firms engage in a bargaining process to reach a binding R&D agreement. Firms through bargaining can reach an R&D agreement which specifies their R&D investment levels. The investment levels under R&D coopetition are higher compared with the investment levels under R&D competition. Firms’ profits are also higher under R&D coopetition compared with R&D competition. We conclude that R&D coopetition can alleviate the individual R&D investment disincentive and work as a strategic instrument that enhances product innovation and firms’ profits.

Suggested Citation

  • Ramsza Michał & Karbowski Adam, 2020. "Product R&D Coopetition and Firm Performance," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(2), pages 1-9, June.
    • Handle: RePEc:bpj:bejtec:v:20:y:2020:i:2:p:9:n:4
    DOI: 10.1515/bejte-2018-0141
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