Journal Article

No. 2010-1 | January 11, 2010
Endogenous Technology Sharing in R&D Intensive Industries PDF Icon

Abstract

This paper analyses endogenous formation of technology sharing coalitions with asymmetric firms. Coalition partners produce complementary technology advancements, although firms do not co-operate on R&D investment level or in the product market. The equilibrium coalition outcome is either between the two most efficient firms, or a coalition with all three firms. The two-firm coalition is the preferred outcome of a welfare maximising authority if ex ante marginal cost is sufficiently high, and the three-firm coalition is preferred otherwise. Furthermore, we show that the equilibrium outcomes result in the lowest total R&D investment of all possible outcomes. Aircraft engine manufacturing provides a case study, and indicates the importance of antitrust issues as an addition to the theory.

JEL Classification

L11 L13

Citation

Derek J. Clark and Jan Yngve Sand (2010). Endogenous Technology Sharing in R&D Intensive Industries. Economics: The Open-Access, Open-Assessment E-Journal, Vol. 4, 2010-1. http://dx.doi.org/10.5018/economics-ejournal.ja.2010-1

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