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Research Joint Ventures, Licensing, and Industrial Policy

Author

Listed:
  • Fan, Cuihong
  • Wolfstetter, Elmar G.

Abstract

This paper reconsiders the explanation of R&D subsidies by Spencer and Brander (1983) and others by allowing firms to license their innovations and to pool their R&D investments. We show that in equilibrium R&D joint ventures are formed and licensing occurs in a way that eliminates the strategic benefits of R&D investment in the export oligopoly game. Nevertheless, national governments are driven to subsidize their own national firms in order to increase their strength in the joint venture bargaining game. Therefore, our analysis suggests an alternative explanation of the observed proliferation of R&D subsidies.

Suggested Citation

  • Fan, Cuihong & Wolfstetter, Elmar G., 2005. "Research Joint Ventures, Licensing, and Industrial Policy," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 89, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    • Handle: RePEc:trf:wpaper:89
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    File URL: https://epub.ub.uni-muenchen.de/13462/1/89.pdf
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    More about this item

    Keywords

    patent licensing; industrial organization; R&D subsidies; research joint ventures; innovation policy;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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