Article ID Journal Published Year Pages File Type
9724497 International Journal of Industrial Organization 2005 15 Pages PDF
Abstract
This paper explores the endogenous determination of R&D appropriability through the firms' choice of R&D approaches. Whereas identical broad R&D approaches 'connect' firms with their R&D environment and maximize absorptive capacities, the opposite holds for idiosyncratic R&D approaches. Our model shows that competing firms choose identical R&D approaches in order to maximize knowledge flows between each other. In essence, this frees firms from the 'prisoner's dilemma' of aggressive investment in R&D. Our analysis contrasts with Kamien and Zang's (2000) [Kamien, M., Zang, I., 2000. Meet me halfway: research joint ventures and absorptive capacity. International Journal of Industrial Organization 18 995-1012] finding that competing firms chose idiosyncratic R&D approaches. We demonstrate that their model also yields a Nash equilibrium for broad identical R&D approaches.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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