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Cooperative R&D and Commitment to A Policy of Know-how Trading

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  • Mário A. P. M. Silva

    (Universidade do Porto)

Abstract

In this paper, we develop a theoretical framework to investigate the impact of adopting a strategy of know-how trading on the degree of research and development (R&D) cooperation. We show that the consequences of cooperation in know-how sharing under the conditions of the model are similar to a policy of cooperation in R&D investments in areas with large spillovers. An industry-wide policy of cooperation among competitors with respect to R&D investment and sharing would simply result in maximal joint profits. This cooperative R&D outcome could be generalized to any degree of spillover other than 100%. In this paper, the commitment to a policy of know-how trading by the participants in an industry is explained by the firm’s attempt to induce the equilibrium of a single industry-wide cooperative research joint venture. In a repeated game framework, we show that pre-commitments by non-cooperative firms to disclose their own know-how to the industry can be effective in inducing cooperative R&D investments by the participants.

Suggested Citation

  • Mário A. P. M. Silva, 2018. "Cooperative R&D and Commitment to A Policy of Know-how Trading," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(2), pages 123-133, May.
    • Handle: RePEc:kap:iaecre:v:24:y:2018:i:2:d:10.1007_s11294-018-9683-y
    DOI: 10.1007/s11294-018-9683-y
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    References listed on IDEAS

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