Working Paper Series
Cooperative Product Development and Endogenous Information Sharing
Abstract: In this paper, a model of product innovation is developed
that endogenizes the degree of cooperation. Two opposing forces affect firm
profit in an R&D joint venture. Cooperation increases the quality of the
product but it also makes the new products more similar. The increasing
substitutability of the product intensifies competition in the production
stage. Thus, it may not be optimal to share all of the product information.
The basic model is altered to allow for a joint-selling agreement and for
tariffs or transport costs. Firms are found to increase R&D cooperation if
they are protected from product market competition.
Keywords: R&D cooperation; Product innovation; Information sharing; (follow links to similar papers)
JEL-Codes: L00; L10; (follow links to similar papers)
40 pages, December 15, 2000
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