Why Firms Form (Or do not Form) RJVS

Abstract

In this article, we examine why it is difficult to induce firms to form Research Joint Ventures (RJVs). We examine various incentives and disincentives for RJV formation by estimating an endogeneous switching model using data from the US National Cooperative Research Act. The empirical findings support hypotheses that firms of different sizes have disincentives to form RJVs and that cost-sharing is an important incentive for RJV participation. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

Horizontal Agreements and R&D Complementarities: Merger versus RJV

“…20 In stage 1, x i is set to maximise Π i = q 2 i − γ 2 x 2 i . Imposing symmetry (x i = x N A ∀i) on the resulting FOC and solving gives…”

Endogenous Technology Sharing in R&D Intensive Industries

“…The theoretical model predicts an inverted-U shaped relationship between competition and innovation, and the empirical analysis nds evidence for such a relationship. Röller, Siebert and Tombak (2007) analyse incentives to form RJVs by estimating an endogenous switching model using U.S. data. They also construct a theoretical model for RJV formation with asymmetric rms, but their approach is different to ours in three important aspects in that they only consider a duopoly, rms in an RJV coordinate their investment and share R&D costs, and nally as a consequence of only considering a duopoly they do not consider endogenous RJV formation.…”

Size of RJVs and Degree of Cooperation in Product Development

“…6 The way we model cost of cooperation is similar to Lambertini et al (2002), but our setting differs in that the cost of cooperation varies with the degree of cooperation. 7 See also Röller et al (2007), who show that "asymmetries" among the firms (in marginal cost) may lead to a disincentive to form an RJV. between the size and the scope of the RJV in both cases (i) and (ii). In case (iii), we find a positive relationship between the equilibrium size and the equilibrium scope of the RJV.…”