Research and Development Cooperation between Rivals: A Novel Motive beyond New Knowledge

.
DOI: 10.4236/ti.2011.21006   PDF   HTML     4,684 Downloads   7,750 Views  

Abstract

The paper examines a motive for R&D cooperation with a rival by considering the behavior of a quality follower in a model of vertically differentiated products. We show that, in some settings, a quality follower has an incentive to contribute money to R&D activity of a quality leader with the sole purpose of making the leader’s products even better. The reason behind this motivation is that the leader’s product quality is serving as an upper-constraint in the decision process of the follower regarding product quality selection. Thus, if the leader’s product quality is raised both firms will be better off.

Share and Cite:

L. Niem, "Research and Development Cooperation between Rivals: A Novel Motive beyond New Knowledge," Technology and Investment, Vol. 2 No. 1, 2011, pp. 47-51. doi: 10.4236/ti.2011.21006.

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1] W. A. Cohen and D. A. Levinthal, “Innovation and Learning: The Two Faces of R&D,” Economic Journal, Vol. 99, No. 397, 1989, pp. 569-596. doi:10.2307/2233763
[2] W. A. Cohen and D. A. Levinthal, “Absorptive Capacity: a New Perspective on Learning and Innovation,” Administrative Science Quarterly, Vol. 35, No.1, 1990, pp. 128-152. doi:10.2307/2393553
[3] B. Cassiman and R. Veugelers, “R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium,” American Economic Review, Vol. 92, No. 4, 2002, pp. 1169-1184. doi:10.1257/00028280260344704
[4] R. Casadesus-Masanell and D. B. Yoffie, “Wintel: Cooperation and Conflict,” Management Science, Vol. 53, No. 4, 2007, pp. 584-598. doi:10.1287/mnsc.1060.0672
[5] B. Kogut, “Joint Ventures: Theoretical and Empirical Perspectives,” Strategic Management Journal, Vol. 9, No. 4, 1988, pp. 319-332. doi:10.1002/smj.4250090403
[6] T. Schmidt, “Motives for Innovation Co-Operation: Evidence from the Canadian Survey of Innovation,” ZEW Discussion Paper, Center for European Economic Research, No. 07-018, 2007.
[7] X. Wauthy, “Quality Choice in Models of Vertical Differentiation,” The Journal of Industrial Economics, Vol. 44, No. 3, 1996, pp. 345-353. doi:10.2307/2950501
[8] A. J. Choi and H. S. Shin, “A Comment on a Model of Vertical Product Differentiation,” Journal of Industrial Economics, Vol. 40, No. 2, 1992, pp. 229-231. doi:10.2307/2950513
[9] L. Beloqui and J. M. Usategui, “Vertical Differentiation and Entry Deterrence: A Reconsideration,” DFAEII Working Papers, Dept. Fundamentos del Analisis Economico II, Universidad del Pais Vasco, WP 2005-06, 2005.
[10] K. S. Moorthy, “Product and Price Competition in a Duopoly,” Marketing Science, Vol. 7, No. 2, 1988, pp. 141-168. doi:10.1287/mksc.7.2.141
[11] A. Shaked and J. Sutton, “Relaxing Price Competition through Product Differentiation,” Review of Economic Studies, Vol. 49, No. 1, 1982, pp. 3-13. doi:10.2307/2297136

  
comments powered by Disqus

Copyright © 2020 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.