Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/36487 
Year of Publication: 
2008
Series/Report no.: 
Dresden Discussion Paper Series in Economics No. 11/08
Publisher: 
Technische Universität Dresden, Fakultät Wirtschaftswissenschaften, Dresden
Abstract: 
Starting from the premise that firms are distinct in terms of their capacity to create radical product innovations, the present paper attempts to explore how firms choose between different forms of R&D cooperation and their consequences for social welfare. It studies a duopolistic market, where firms have to choose between R&D competition, a cost sharing alliance, an information sharing alliance or an R&D cartel. The paper demonstrates that asymmetry has an impact on alliance choice and social welfare. With similar firms, the cost sharing alliance will be preferred to R&D competition or any other form of collaboration. With significant asymmetry no alliance may be formed. In terms of social welfare, any alliance is preferable to R&D competition and the R&D cartel is the best. Given this inherent contradiction between private preferences and optimal social choice, the paper provides a rationale for public investment in terms of science and technology parks to promote R&D cartels.
Subjects: 
R&D competition
R&D cooperation
technology parks
JEL: 
L1
L24
L5
Document Type: 
Working Paper

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