R&D cooperation with asymmetric spillovers

Abstract

This paper analyses R&D cooperation with asymmetric spillovers. It is shown that the change in R&D by a firm following cooperation is proportional to the gap between the spillover rate transmitted by that firm and a critical level of spillovers. In consequence, cooperation increases total R&D investments when the average of firms' spillover rates is sufficiently high. Whereas with symmetric spillovers cooperation is always beneficial to firms, with asymmetric spillovers only a very limited range of spillovers makes cooperation beneficial to both firms. Asymmetries also create a potential conflict between maximizing total welfare and maximizing effective cost reduction. JEL classification: L13, O33Coope´ration en R&D avec effets de retombe´e asyme´triques. Ce me´moire analyse l'effet de la coope´ration en R&D quand il y a des asyme´tries dans les effets externes technologiques. On montre que le changement dans la R&D d'une entreprise a`la suite de la coope´ration est proportionnel a`l'e´cart entre l'externalite´transmise par cette entreprise et une valeur critique de l'externalite´. En conse´quence, la coope´ration augmente les investissements totaux en R&D quand le taux de retombe´e moyen est suffisamment e´leve´. Alors que la coope´ration est toujours be´ne´fique lorsque les externalite´s sont syme´triques, les asyme´tries rendent la coope´ration non be´ne´fique pour au moins l'une des entreprises pour un vaste e´ventail de parame`tres. Les asyme´tries peuvent aussi cre´er un conflit potentiel entre la maximisation du bien-eˆtre total et la maximisation des re´duction de couˆts effectifs.

Partner Selection in R&D Cooperation

“…In a sense, an advantage of some degree of competition (certainly beyond duopoly) is that it makes RJVs profitable more often, especially when firms are asymmetric. Many studies have noted that asymmetries in costs (Baerenss, 1999;Röller et al, 1997;Kesteloot and Veugelers, 1997) or in spillovers (Atallah, 2005) make agreeing on cooperation more difficult. The current model shows that this problem is less acute when the RJV comprises only a subset of firms in the industry.…”

“…The leader does not perform any R&D, however, and the two small firms are symmetric. Atallah (2005) analyzes cooperation between two firms which differ in their spillover rates, and finds that asymmetries in spillovers make agreeing on cooperation more difficult.…”

Are you the right partner? R&D agreement as a screening device

“…3 Let -2 (0; 1) denote the productivity of Örm 2ís R&D investment; therefore, Örm 2 can be of two types, -L or -H , with the probability assigned to the e¢cient type deÖned as P rob(-= -H ) = 1. Therefore, if Örm 2 is of type -L (low R&D productivity), the cost reduction generated by investing K is t 2 = t-.…”

Spillovers of innovation activities and their profitability

“…Perhaps most importantly, different spillover effects may result from differences in firm-specific absorptive capacities (Cohen and Levinthal 1989). There exist a few models, like de Bondt and Henriques (1995), Amir and Wooders (2000), Atallah (2005) or Vandekerckhove and De Bondt (2007) which include asymmetries in spillovers. Most of these models assume that aside of the spillover asymmetry the firms are similar and equilibrium is calculated by determining output à la Cournot.…”