Optimal asymmetric strategies in research joint ventures

Shaffer, Greg and Salant, Stephen (1998) Optimal asymmetric strategies in research joint ventures. International Journal of Industrial Organization, 16 (2). pp. 195-208. ISSN 0167-7187

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Abstract

This paper identifies an overlooked implication of models of research joint ventures initiated by d'Aspremont and Jacquemin (1988). Even though the aggregate R&D cost of identical firms in a research joint venture would be lowest if they invested equally to reduce subsequent production costs, nonetheless members may often enlarge their overall joint profit by making unequal investments. Such a strategy raises costs in the investment stage but may create more than offsetting benefits in the production stage since industry profits are larger there when the firms are of unequal size. When the consideration leading to asymmetry prevails, we find that, in contrast to previous work, a research joint venture can raise welfare even when there are no spillovers. © 1998 Elsevier Science B.V.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > Norwich Business School
University of East Anglia > Faculty of Social Sciences > Research Groups > Business Regulation
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Depositing User: Nicola Secker
Date Deposited: 01 Apr 2011 08:57
Last Modified: 25 Jul 2018 08:05
URI: https://ueaeprints.uea.ac.uk/id/eprint/27848
DOI: 10.1016/S0167-7187(96)01046-6

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