Working Paper: CEPR ID: DP1985
Authors: Stephanie Rosenkranz
Abstract: Firms' incentives to form research joint ventures (RJVs) are analysed in an incomplete information framework when technological know-how is private information. Firms first decide on cooperation and information revelation and then compete for a patent. Provided that spillovers exist in the case of unilateral revelation of know-how, it can be shown that non-cooperation is always an equilibrium. If competition is in a second-price auction with positive minimum R&D requirements this equilibrium is unique for high spillovers. Cooperation can occur for low spillovers. For certain parameters there exists an equilibrium in which only firms with low know-how cooperate.
Keywords: Research Joint Ventures; Incomplete Information; Spillovers; Second-Price Auction
JEL Codes: O82; L13; O31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| spillovers (O36) | firms' decisions to cooperate (L14) |
| minimum R&D requirements (O32) | likelihood of cooperation (C71) |
| type of firm (high vs. low know-how) (L29) | cooperation strategies (C71) |
| low spillovers (F69) | strong incentive to cooperate (C71) |
| high spillovers (F69) | non-cooperation (D74) |
| low know-how firms (L19) | cooperate under certain conditions (P13) |