Cooperation in R&D: patenting, licensing, and contracting
(2014) Game Theory and Business Applications — ISBN: [978-1-4614-7095-3], p. 265-286, published
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- There are several aspects of innovative activity that makes it more complex to analyze than the production and distribution of standard physical goods. Innovative activity uses and produces knowledge. This is both costly and risky and the resulting product has (at least partially) the main characteristics of a public good: it is nonrival and non-excludable. Without any sort of protection, individual agent would have little incentive to do research for fear of unsuccessful research effort or for fear of imitation by others (through spillovers or free access). Outside the possibility of secret holding or lead time and reputation, protection typically relies on some kind of collective arrangements, involving more or less legal intervention, according to degree of verifiability by a court and the willingness of the public authority. Patent protection (with the possibility of licensing the innovation) is one example. Cooperative R&D and research joint ventures are others. Patent protection increases the appropriability of the innovation and allows the selling of the innovation to others. Cooperative R&D or research joint ventures internalize knowledge spillovers, that is the transmission of knowledge from one agent to another. But cooperation may take many contractual forms and does involve moral hazard and adverse selection issues.
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Bhattacharya, S., d’Aspremont-Lynden, C., Guriev, S., Sen, D., & Taumann, Y. (2014). Cooperation in R&D: patenting, licensing, and contracting. In K. Chatterjee and W. Samuelson (ed.), Game Theory and Business Applications (p. p. 265-286). Springer Science + Business Media. https://doi.org/10.1007/978-1-4614-7095-3_10