THE IMPACT OF MARKET STRUCTURE AND LEARNING ON THE TRADEOFF BETWEEN R&D COMPETITION AND COOPERATION Author(s): David Besanko and Jianjun Wu Source: The Journal of Industrial Economics, Vol. 61, No. 1 (March 2013), pp. 166-201 Published by: Wiley Stable URL: Accessed: 16-03-2020 12:56 UTC JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected] Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at Wiley is collaborating with JSTOR to digitize, preserve and extend access to The Journal of Industrial Economics This content downloaded from 220.127.116.11 on Mon, 16 Mar 2020 12:56:29 UTC All use subject to
THE JOURNAL OF INDUSTRIAL ECONOMICS 0022-1821 Volume LXI March 2013 No. 1 THE IMPACT OF MARKET STRUCTURE AND LEARNING ON THE TRADEOFF BETWEEN R&D COMPETITION AND COOPERATION* David Besanko^ JlANJUN Wu* This paper compares R&D competition and cooperation when firms can devote resources to a 'safe' investment or a risky R&D investmen When the discovery of a new product creates positive externalities o non-discovering firms, equilibrium investment flow, ex ante invest ment, and welfare under R&D competition are less than or equal to what they are under research cooperation. With negative externalitie R&D cooperation results in the same or lower ex ante investment tha under R&D competition, and social welfare may also be less. Ou results have relevance for empirical studies of the impact of R&D cooperation on R&D outcomes. I. INTRODUCTION In recent decades, countries around the world have permitted compete in the same product market to engage in cooperative ties. For example, in 1984, the European Commission adopted No. 418/85 which relaxed antitrust restrictions on joint R&D competitors and provided an exemption from antitrust scrut collaboration involving firms whose combined product mark less than 20 per cent. The same year, the U.S. enacted the N erative Research Act that mandated that research joint vent erned by a rule of reason, as opposed to per se illegality, if c antitrust grounds. Such policies were motivated by the concer of antitrust liability discouraged firms - particularly smaller were thought to be the most important source of ideas for new p technologies - from engaging in collaborative R&D (Scott [20 The research collaboration that these policy interventio encourage is potentially valuable for several reasons. Collabo *We would like to thank the Editor and two anonymous referees for their valuable comments on an earlier version of this paper.
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