Research Joint Ventures, Licensing, and Industrial Policy

Fan, Cuihong and Wolfstetter, Elmar G. (October 2005): Research Joint Ventures, Licensing, and Industrial Policy. SFB/TR 15 Discussion Paper No. 89

Abstract

This paper reconsiders the explanation of R&D subsidies by Spencer and Brander (1983) and others by allowing firms to license their innovations and to pool their R&D investments. We show that in equilibrium R&D joint ventures are formed and licensing occurs in a way that eliminates the strategic benefits of R&D investment in the export oligopoly game. Nevertheless, national governments are driven to subsidize their own national firms in order to increase their strength in the joint venture bargaining game. Therefore, our analysis suggests an alternative explanation of the observed proliferation of R&D subsidies.

• Item Type: Paper
• Keywords: patent licensing, industrial organization, R&D subsidies, research joint ventures, innovation policy
• Faculties: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A7 - Auktionen, Anreizprobleme und Wettbewerb
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: L13, O34
• Language: English