Working Paper: CEPR ID: DP2698
Authors: Stephanie Rosenkranz; Patrick Schmitz
Abstract: We explore the dynamic evolution of property rights regimes in R&D alliances using the incomplete contract approach pioneered by Grossman, Hart and Moore (Hart and Moore, Journal of Political Economy (1990), and Grossman and Hart, Journal of Political Economy (1986)). In contrast to the standard analysis, the productive asset is an excludable public good such as a patent. Moreover, both firms can decide whether to disclose their know-how and invest effort. Know-how that has once been released cannot be concealed later. We characterize different scenarios in which the optimal ownership structure may change over time due to a trade-off between inducing know-how disclosure and ensuring maximum effort.
Keywords: incomplete contracts; partnerships; property rights; R&D alliances
JEL Codes: L14; L22; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Veto power (D72) | immediate know-how disclosure (O36) |
| immediate know-how disclosure (O36) | collaboration payoff (O36) |
| Default payoff increase (J33) | reluctance to disclose know-how (O36) |
| Equal power (joint ownership) (J54) | early know-how disclosure (O36) |
| early know-how disclosure (O36) | renegotiation of ownership structure (G34) |
| renegotiation of ownership structure (G34) | maximum effort in subsequent projects (D29) |
| Horizontal ownership structure (L22) | optimized effort investments (G11) |
| Exerting effort (Y60) | collaboration surplus (D26) |
| Ownership structure optimal for disclosure (G32) | not optimal for effort (H21) |
| Ownership structure optimal for effort (L21) | not optimal for disclosure (G14) |